Astral expects 155% earnings drop amid bird flu, load-shedding

Astral Food informed shareholders today that it expects its earnings per share to drop by at least 145% and swing to a loss per share for the 2023 financial year.

In a trading statement released this morning, Astral said it expects earnings per share for the year ended 30 September 2023 to decrease by between 145% and 155%.

This will result in a loss per share of between 1,251 and 1,529 cents per share, compared to a profit per share of 2,781 in 2022.

Headline earnings per share are also expected to decrease by between 145% and 155% compared to the previous year. 

This will result in a headline loss per share of between 1,243 cents and 1,519 cents per share.

In a previous trading update, Astral informed the market that a significant cost impact from load-shedding would continue for the remainder of its financial year. 

These costs included the additional cost of diesel to power standby generators, costs associated with a cutback in poultry production in order to catch up with the backlog in the slaughter programme, higher feed costs due to older broilers, and overtime costs for the additional shifts introduced in its poultry processing plants.

These costs amounted to R741 million for the six months ended 31 March 2023 and forecasted R919 million for the remainder of the financial year. 

Astral said the cost to operate diesel generators is now an embedded expense burden to the amount of approximately R45 million per month. 

The total costs of load-shedding, including capital costs of R200 million, will amount to approximately R1.9 billion for 2023. 

“This has been the main reason for the severe decline of Astral’s results for the year ending 30 September 2023,” the company said.

However, the food producer also pointed to the outbreak of Highly Pathogenic Avian Influenza (bird flu), which has ravaged the local poultry industry.

This outbreak led to additional costs to cull broiler breeding stock in line with regulated disease control measures. There have been over 7 million chickens culled in the country so far. 

However, the losses extend beyond the biological cost of the culled birds but also include costs relating to measures taken for the safe disposal of these birds and biosecurity measures implemented aimed at curbing the spread of the disease, Astral said. 

“The poultry industry, in both the table egg and broiler sectors, has seen significant losses as a new strain of bird flu has spread across both Gauteng and Mpumalanga at an alarming rate,” the producer said. 

“The bird flu has already caused short supplies of table eggs into the market, and it is expected that the supply of poultry meat into the value chain could be affected negatively in the coming months.” 

Astral said in September that, to date, the total cost associated with the current bird flu outbreak amounts to approximately R220 million.

The company said its balance sheet is geared to approximately 26% to maintain sufficient liquidity and solvency. 

Astral’s results for the 2023 financial year will be published on or about 20 November 2023.