| Thu 27 Oct 2022, 12:00 | | ASTRAL FOODS LIMITED - Trading Statement & General Trading Update |
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Trading Statement & General Trading Update
ASTRAL FOODS LIMITED
“Astral Foods” or “the Group”
(Reg. No. 1978/003194/06)
(Incorporated in the Republic of South Africa)
Share Code: ARL
ISIN Code: ZAE000029757
TRADING STATEMENT & GENERAL TRADING UPDATE
1. TRADING STATEMENT
Shareholders of Astral Foods are advised that a reasonable
degree of certainty exists that, for its 2022 financial
year ended 30 September 2022 (“2022 financial year”):
• Earnings per share is expected to increase between
118% and 128% compared to the year ended 30 September
2021 (“prior comparable year”). This implies that
earnings per share is expected to be between 2 670 and
2 793 cents per share (30 September 2021: 1 225 cents
per share); and
• Headline earnings per share is expected to increase
between 118% and 128% compared to the prior comparable
year. This implies that headline earnings per share
is expected to be between 2 677 cents and 2 799 cents
per share (30 September 2021: 1 228 cents per share).
The above earnings growth is measured against a low base
in the prior comparable year that was severely impacted by
COVID-19 related lockdowns that adversely affected the
South African economy and poultry consumption patterns.
During the prior comparable year, Astral Foods could also
not recover (the then) severe increases in feed costs in
the selling price of poultry.
During the 2022 financial year the improved earnings were
achieved mainly as a result of:
• increased poultry sales volumes on the back of
substantial capital investments made to increase
Astral Foods’ poultry production and processing
capacity, resulting in improved economies of scale
benefits throughout the Group’s integrated value
chain; and
• improved poultry margins, realised through efficiency
improvements in the broiler production value chain,
as well as the partial recoupment of higher feed raw
material and elevated energy input costs.
It is expected that the results for the 2022 financial year
will be published on SENS on or about Monday, 21 November 2022.
2. GENERAL TRADING UPDATE
Notwithstanding the good performance outlined above for the
2022 financial year, the performance for at least the next
six months ending 31 March 2023 will be negatively impacted
by:
• Extraordinary high feed input costs where this
component makes up 70% of the cost of producing a live
broiler. SAFEX maize is trading at record highs
following international coarse grain prices,
exacerbated by a weak and volatile local currency
against the US dollar. The current outlook is for
continued high soft commodity prices deep into Astral
Foods’ 2023 financial year.
• The Group’s broiler operations are not able to fully
recover record high feed input costs through the
selling price of poultry. Currently Astral Foods is
“subsidising” the record high input costs in current
poultry selling prices to both its customer base and
the consumer. This scenario cannot be sustained and
will unfortunately lead to further poultry selling
price inflation.
• The Group is experiencing severe operational
disruptions on the back of Eskom load shedding. This
is having an adverse impact on operational efficiencies
and adding abnormal costs to the business. Production
cutbacks have already been implemented from October
2022 to partially manage the impact of load shedding
which severely impacts Astral’s “just in time”
integrated poultry production and processing chain.
• In addition, the delay in the implementation of anti-
dumping duties and the continued dumping of poultry
products on our shores, water supply disruptions and
the further escalation of energy input costs will all
have a negative bearing on the outlook for the 2023
financial year.
• The current operational scenario as articulated above
will contribute to the complete erosion of the already
below average broiler profit margins of the recent
past.
Accordingly, the level of earnings the Group expects during
the first half of 2023 financial year, is likely to be
considerably down against the prior comparative period.
The Group’s balance sheet position is healthy with good
levels of liquidity in place.
The Board will provide further updates as additional
information becomes available.
The financial information in this announcement has not been
reviewed or reported on by Astral Foods’ auditor.
Pretoria
27 October 2022
Sponsor: Nedbank Corporate and Investment Banking, a
division of Nedbank Limited
Date: 27-10-2022 12:00:00
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