JSE (Johannesburg Stock Exchange)-listed Agricultural services and diversified foods group Afgri is expecting a decrease of 25-40% on-year in headline earnings per share (HEPS) for the year ending June due to cheap chicken imports.

Earnings per share (EPS) is expected to decrease between 5% and 15% for the year ending June 30.

"The headline earnings per share are negatively impacted by losses in the group's animal protein division as a result of record levels of poultry imports and high feed raw material input costs. These factors resulted in considerable reductions in margins, which have placed the South African poultry industry in distress," CEO Chris Venter said.

South Africa's poultry sellers are under threat from imported poultry, especially from Brazil. These chickens are sold at lower prices, but are of competitive quality.

The government is studying ways of assisting the embattled industry.

The Brazilian chicken industry is under investigation by global trade authorities for charges of dumping. The South African government last year added additional duties of between 6% and 63% on imports of Brazilian chicken.

"The government is still in the process of addressing the proposed additional import tariffs and antidumping initiatives to combat the record levels of imports. Should these initiatives not materialise soon, the Afgri board will assess the possible impairment of the poultry business, which has not been taken into account in this trading statement. Such possible impairment will impact EPS but not HEPS," Afgri said.

Afgri is set to merge with, Senwes in June this year. A consolidated farming company would better manage difficult market conditions, according to Venter.

The deal would see Afgri's wholly owned Afgri Operations sell its retail businesses, consisting of Town and Country and Farm City, as well as its shareholding in Partrite, to the new entity.

Senwes would in turn sell its retail outlets, including Senwes Village, Village Grocer and Quick Serve, to the new merged entity.

Both Afgri and Senwes said the merger will enable them to save costs from shared overhead structures, including updating and integrating the IT system.

The new entity was predicted to be worth ZAR880 million (US$97.367 million).