Dark clouds gather over South Africa’s biggest poultry producer

Rising food inflation, higher fuel prices, and the impact of El Niño may put pressure on Astral Foods’ earnings over the coming months.

This comes after the company announced that its earnings doubled in the 2026 financial year, with analysts believing earnings have peaked for the time being.

Astral is South Africa’s largest integrated poultry producer, dealing in poultry processing, animal feed production, and breeding genetics.

From 2022 to 2023, Astral was under significant pressure, contending with a bird flu outbreak, persistent load-shedding, and higher costs.

However, many of these pressures have faded in recent years, with Astral returning to a profit in its 2024 financial year.

In the years since, Astral has continued to go from strength to strength, growing its headline earnings per share (HEPS) by 14.2% in 2025.

In the first half of its 2026 financial year, Astral reported a 466.7% increase in HEPS.

Over the past year, the company has benefited from lower poultry feed costs, disciplined cost management, and improved efficiencies.

This momentum is expected to continue into the second half of the 2026 financial year, which Astral outlined in a trading statement in October 2026.

The group said it continued to benefit from lower feed input costs, particularly maize and soya prices.

At the same time, Astral continued to implement improvements to its poultry farming, making its systems more efficient and benefiting broiler live production costs,

The group said volume growth in the higher-margin segments of its sales mix would further support its bottom line.

All of these positive factors are set to result in Astral reporting an increase in HEPS of between 95% and 105% for the 2026 financial year.

This means Astral has doubled its headline earnings over the past year, marking a notable comeback from the struggles it faced a few years ago.

The tide may turn

In an interview with BusinessDayTV, All Weather Capital equity analyst Jarred Houston noted that Astral is a cyclical business.

He said the company is currently in a “sweet spot” in the cycle, with Astral benefiting from several factors working in its favour.

“They’ve got support on the cost side, so feed costs are lower, but also support on the revenue side from higher realised chicken prices,” he said. 

“So, both directions of the income statement are working for them in the right direction and ultimately driving much stronger bottom line results for them.”

Now, he said, attention must turn to Astral’s outlook for the coming months, which appears more complex.

“The prospects for feed stocks and what might happen to crops with El Niño is starting to be considered in terms of forward pricing,” Houston said.

In South Africa, an El Niño typically brings below-average summer rainfall and increases the risk of drought.

This could push up the price of staple crops such as maize and soya, impacting feed costs for poultry producers.

“There’s a lot going on in Brazil at the moment with a disease outbreak as well that might impact global chicken prices,” he added. 

“So, quite difficult to call at this point, but Astral is certainly in a sweet spot, earning well and producing good cash flows and returns for shareholders.”

In the same interview, Benguala Global Fund Managers CIO Zwelakhe Mnguni agreed with Houston, adding that Astral’s earnings appear to have peaked.

“I think there’s no doubt that their earnings are at a peak at the moment and you can see even the markets value them at about five times,” Mnguni said.

He also noted the potential impact of food inflation resulting from the El Niño weather event, as well as the effect of higher oil and fuel prices.

“I think we also might forget that some of the fertiliser trains in the Middle East are incapacitated at the moment and that is a big thing that’s going to drive the feed cost in the coming season,” he said. 

“So, this might be one of their best results for the season, and I think the next direction will probably be that they’ll have to fight hard to stay in a positive direction.”