Astral nosedives to a loss amid load-shedding, bird flu

Astral Food reported a significant loss for the 2023 financial year, as its profit for the year declined by 148% and swung to a loss amid a rampant bird flu outbreak and load-shedding.

Astral released its results for the year ended 30 September 2023 today, which revealed poor results for the food producer.

The company’s revenue declined only marginally by 0.4% to R19.3 billion. 

Revenue in the company’s Feed Division increased slightly year-on-year, but revenue in the Poultry Division – which contributed 82% towards total external revenue – was down, driven by a decline in sales volumes of 9.6%.

Astral’s operating profit margin decreased to -3.2% from 7.4% the year prior, as the company reported a full-year loss of R512.2 million compared to a profit of R1.07 billion in 2022. 

The company said its earnings were significantly impacted by costs associated with load-shedding and the outbreak of Highly Pathogenic Avian Influenza (bird flu).

These factors led to a significant cash outflow, with total capital expenditure of R398 million, which included capital spent on emergency diesel generators and additional water storage at R168 million.

In the company’s Poultry Division, revenue decreased by 0.8% to R15.8 billion due to a decrease in broiler sales volumes and a less-than-ideal product mix, Astral said.

The product basket was negatively impacted by heavier birds as a result of downtime in the processing plants on the back of load-shedding.

This downtime resulted in a backlog in the slaughter programme, with broilers remaining on the farm longer, resulting in older bird ages and heavier live weights.

Broiler slaughter numbers decreased by 15.3% as production cutbacks were implemented in an effort to clear the backlog in processing volumes. 

Live weight slaughtered reduced by only 4.1%, despite broiler numbers processed reducing from an average of 5.8 million birds per week in 2022 to 4.9 million birds per week in 2023. 

Sales volumes in this division decreased by 9.6% – down 50 072 tons from the year before.

Operating profit for the Poultry Division decreased by 272% to a loss of R1.38 billion.

Expenses in this segment increased year-on-year, as load-shedding cost the company R1.62 billion, water supply interruptions cost R31 million, and the outbreak of bird flu cost Astral R400 million.

The company said bird flu remains a major risk to the local poultry industry. However, progress is being made towards approvals for voluntary vaccination of broiler breeding stock.

Astral did not declare a dividend for the 2023 financial year.