South African poultry company said its first quarter operating profit fell by 70%. Astral Foods attributed its dismal performance to weakened spending and commodity price increase.
Maize which is its major raw materials for poultry feeds saw a surge in prices as well as soya meal prices with the company noted will continue to rise.
Astral Foods also cited the influx of imported poultry products into the country despite safeguards put in place by the International Trade Administration Commission of South Africa (ITAC).
Astral Foods noted that:
In addition to the above, Astral introduced planned production cutbacks in order to alleviate the pressure on the overstocked poultry levels.
Shareholders are advised that the operating profit for the first quarter was 70% lower than the corresponding period. This decline was expected given the reasons provided above and indications are that trading conditions that gave rise to this
lower profitability, will continue well into 2017.
Based on the first quarter’s results and the continuation of the current unfavourable trading conditions, both the earnings per share (EPS) and headline earnings per share (HEPS) are expected to be down not more than 75% on the results for the previous year’s comparative period. This implies that both the EPS and the HEPS for the six months to March 2017 is expected to be at least 194 cents per share (2016: EPS 777 cents per share and HEPS 774 cents per share).
A trading statement on the results for the first half of the 2017 financial year will be released once a more definite range of the expected earnings can be provided.