JSE-listed integrated poultry producer Astral Foods has managed to swing from an operating loss of R621-million in the 2023 financial year to an operating profit of R1.1-billion for the financial year ended September 30, on the back of its recovery strategy to deal with the slump induced by Avian influenza and loadshedding.

“The successful execution of our ‘re-set, re-focus and re-start’ campaign during the year under review resulted in the group increasing operating profit by 281% year-on-year and returning to profitability after the worst year in Astral’s history,” comments outgoing CEO Chris Schutte.

The group reported a revenue increase of 6.4% year-on-year to R20.5-billion.

The poultry division generated 7.7% higher revenue year-on-year at R17.1-billion, driven by an increase in broiler sales volumes and an improvement in broiler sales realisations compared with the prior financial year.

The prior year involved disrupted operations owing to loadshedding and the subsequent sales mix. Astral’s product basket has since normalised.

Astral’s broiler slaughter numbers increased by 10.5% in the year under review, where a lower quantity of birds, but with a heavier live weight, were processed following the impact of loadshedding in the prior financial year.

The group’s poultry sales volumes increased by 5.2% year-on-year, while improved margins led to an operating profit increase of 142% year-on-year in the division to R580-million.

"Broiler performances improved significantly following the normalisation of bird age and live weight in June 2023, as the backlog in the slaughter programme following the loadshedding crisis was cleared, with efficiencies in the year under review surpassing historical performances.

“Together with lower feed prices on better raw material input costs over the comparable period, broiler live costs improved for the year under review. Broiler feed prices decreased by 2.1% over the year, with feed cost remaining the key driver of profitability, representing about 65% of the live cost of a broiler,” Schutte notes.

Moreover, revenue in the feed division decreased by 15.2% year-on-year to R9.8-billion, owing to lower feed selling prices as raw material costs lowered, as well as lower internal feed sale volumes.

Operating profit in the feed division decreased by 28.2% in the year under review to R545-million, compared with the prior financial year, as a result of the lower internal sales volumes.

The yellow maize price decreased to an average R3 988/t in the year under review, which is R217/t lower than the average R4 205/t yellow maize price in the prior year.

Soya meal prices also decreased to an average of R9 820/t, marking a R1 901/t decrease from the R11 721/t average price in the prior year.

Moreover, Astral explains that its feed sales volumes decreased by 11% year-on-year as the internal requirement for broiler feed decreased by 19.5% to 187 133 t, owing to higher feed consumption in the prior year as Astral had a backlog in its slaughter programme and older and heavier birds consumed more feed.

External feed sales, however, increased by 4.7% year-on-year to 24 503 t, on the back of higher demand in the pig and sheep feed sectors locally, as well as growth in sales volumes in Zambia. 

Astral’s headline earnings a share increased by 245% year-on-year to R19.20, compared with a headline loss a share of R13.24 posted in the prior financial year.

Overall, the group’s R1-billion net cash inflow in the year under review cleared its entire debt balance that was accumulated during the prior year, which enabled the board to declare a final dividend of 520c apiece.

Looking ahead, Astral is cautiously optimistic about the macroeconomic environment that is showing early signs of recovery in South Africa.

Schutte says the group is well positioned to benefit from improvements in the consumer environment, however, infrastructure failures across the country remain a great concern.

Schutte will retire as Astral CEO on January 30, 2025, and will be succeeded by COO Gary Arnold.