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Astral Foods, the integrated poultry producer, has been able to return to profitable waters, increasing its operating profit by 281% from an operating loss of R621 million in 2023 to a profit of R1 125 million for the year ending September 2024. The poor performance in 2023 was primarily due to load shedding and bird flu.
The company also increased its revenue by 6% to R20,5 billion, boosted headline earnings per share by 245% to 1 920 cents, and cleared the R1 billion debt incurred the previous year. This turnaround culminated in a final dividend of 520 cents per share being declared.
Chris Schutte, Astral’s retiring CEO after 16 years attributed the success to their ‘Re-set, Re-focus and Re-start’ campaign (Project 3R), which helped the group return to profitability after the worst year in its history. “Leading Astral has been a privilege, and I am grateful to leave the company in a healthy financial position, creating a platform for future growth. I am confident that our well-established and highly experienced executive management team, recognised as the best in the industry, will continue to drive Astral’s success. I would like to congratulate Gary Arnold on his appointment as my successor and wish him and the management team all the best.”
Poultry division
Despite economic pressures on households, Astral’s poultry division saw a 7,7% revenue increase to R17, 1 billion (2023: R15,8 billion). With reduced loadshedding, more consumers have been cooking at home, leading to increased poultry meat sales at the retail level.
Overall sales volumes increased by 4,6%, representing 21 449 tonnes, driven by an increase in fresh and fast-food restaurant (QSR) sales. The poultry division’s operating profit increased by 142% to R580 million, compared to a loss of R1 380 million in 2023. The operating profit margin increased to 3,4% from -8,7% the previous year. Non-feed costs in the division reduced year-on-year, positively impacted by the reduced cost of load shedding (R151 million, R410 million lower than the previous year) and costs related to water supply interruptions (R14 million, R17 million lower than 2023). Profitability also benefitted from an insurance recovery of R198 million related to the 2023 highly pathogenic avian influenza claim in the broiler breeding operations.
Feed division
Lower internal feed sales were the main driver behind the 15,2% revenue decline for the feed division, falling to R9,8 billion this year from R11,6 billion in 2023, Schutte explained during a media briefing. He noted that reduced raw material costs also contributed to this decline. “We need to keep in mind that this year’s lower performance is being compared to a record-high year. Overall, this division still performed very well compared to Astral’s overall history,” Schutte said.
Usually, broilers are slaughtered at 33 days, but last year, load shedding forced the company to feed birds for up to 50 days, resulting in a higher feed conversion ratio. However, another reason for lower feed sales was Astral’s ability to capitalise on good genetic potential, thereby lowering their feed conversion ratio. Consequently, the feed division’s operating profit decreased by 28,3% to R545 million, down from R759 million in 2023.
New product developments
While Astral is refocussing its market strategy, it is also in the process of launching several new products within the next year. The idea for tinned chicken originated from a media outlet twisting Schutte’s words earlier this year. However, the report gained such traction that Astral decided to investigate the possibility of creating this product. Schutte mentioned they are still conducting market research but hope to have Goldi chicken breast fillet in gravy on supermarket shelves by March 2025. “This is pure breast meat in a gravy sauce that can be eaten with a variety of starches. We will position it between corned beef and tinned pilchards.”
Frans van Heerden, Astral’s commercial poultry managing director, stated that they are also preparing to launch new value-added crumbed products before the beginning of December. These products will be similar to the crumbed, southern fried chicken found in restaurants but don’t have to be deep fried. “It is a product that can be popped into the air fryer and therefore it will be healthier.” Additionally, the company is working on market innovation in packaging to ensure the best price for consumers, Van Heerden added. – Susan Marais, Plaas Media
