South Africa’s biggest chicken producer under pressure

Astral Foods is set to report weak results for the first half of its 2025 financial year, as lower selling prices and higher input costs weigh on the producer’s finances and operations.

South Africa’s largest integrated poultry producer has been on a rollercoaster ride over the past few years.

In 2023, Astral was hard hit by the dual threats of load-shedding and bird flu, which caused the producer to make significant losses.

The intense load-shedding of 2023 meant the company could not process chickens for extended periods throughout the year. 

This prevented the company from selling its goods and meant it had to spend additional money on feeding its birds for longer, as they could not be processed.

At the same time, a widespread bird flu outbreak wiped out large parts of its stock and forced the company to spend money on limiting the disease’s impact and slowing its spread.

Fortunately, by 2024, Astral had largely recovered. South Africa experienced its longest load-shedding-free period in years, and the bird flu outbreak was contained.

Therefore, the company’s 2024 financial year saw Astral bounce back into a profit of R737 million.

However, in a SENS announcement on 24 March 2025, Astral warned shareholders that its interim results for the six months ended 31 March 2025 would take a negative turn.

The company explained that selling price deflation on chicken placed severe pressure on broiler net margins. 

This is partly due to a constrained consumer environment and extensive retail promotional activity on frozen chicken, which placed pressure on selling prices. 

This, combined with an increase in poultry feed input costs following the 2024 drought and higher local maize prices, will see Astral report far lower earnings for the first half of its 2025 financial year.

Silver linings and cyber attacks

In a SENS announcement released on Monday, 5 May 2025, Astral specified that its earnings per share (EPS) are expected to decrease by between 55% and 45%. This will result in an EPS of between 415 and 508 cents per share.

The company’s headline earnings per share (HEPS) are expected to decrease by between 60% and 50%, resulting in a HEPS of between 354 cents and 442 cents per share.

Astral was dealt another blow on 16 March 2025, when it experienced a cybersecurity incident. “The group acted swiftly, implementing all disaster recovery protocols and preparedness plans,” it said.

“However, our Poultry Division was negatively impacted by downtime in processing and deliveries to customers.” 

The company said this resulted in a loss of revenue, and combined with costs to catch up a backlog in production, impacted its profits in this reporting period by approximately R20 million. 

“At the date of this announcement, all business units are operating normally following the recovery of our systems,” the company said in its 24 March SENS announcement. 

“Astral can confirm that no confidential information or sensitive data of customers, suppliers or individual stakeholders was compromised as a result of the cyber intrusion.” 

Despite these headwinds, Astral reassured shareholders that its balance sheet position remains strong and will be supported by healthy cash generation for the period under review. 

It said the group’s continued focus on strengthening the balance sheet and prudent working capital management resulted in maintaining a net cash position in the first half of the 2025 financial year.

This is a significant improvement from the first half of its 2024 financial year, which saw the group maintain a net debt position.

Astral is expected to publish its results for the first half of its 2025 financial year on or about Monday, 19 May 2025.