November 14, 2013

 
Astral's poultry division reports less profit

After cutting back on its broiler production, Astral Foods made "a small profit" in its poultry division in the second half of the year to the end of September.

Astral's Chief Executive Officer Chris Schutte said a decision to cut back on broiler production by 5% was taken because of "high imports" of poultry, full cold-storage facilities and to manage pricing.

He said, though, that the strategy was "not sustainable" because sales volume growth was essential to grow the business. In future the group would "play around a bit more" with locations where it expanded and cut back on production, Schutte said.

Astral's poultry division made a ZAR109 million (US$10.6 million) loss for the year and a small turnaround after reporting losses of ZAR117 million (US$11.4 million) for the interim period.

The group increased revenue 3% to ZAR6 billion (US$584 million) with its 8.4% higher selling prices despite the cut in production causing a fall in sales volumes. The group's operating profit was 43% down at ZAR272 million (US$26.5 million).

The feed division increased operating profit by "a satisfactory" 15%. Schutte said the reduction in broiler production meant a 3% loss in the division's internal sales (to its poultry division) but a 4% improvement in external sales meant a 1% gain.

He commended the introduction of import duties on poultry but said more action was needed and had been taken in the form of a submission to the International Trade Administration Commission of SA. It had accepted that the argument had substance.

The group has broiler breeder and hatchery operations in Zambia, Mozambique and Swaziland. Revenue for these businesses was 30% higher at ZAR442 million (US$43 million), with operating profit rising 19% to ZAR45 million (US$4.4 million). Astral declared a gross dividend of ZAR2.22 (US$0.22) for the year out of income reserve.