Astral earnings up 31%, revenue dips
Johannesburg - Poultry producer Astral Foods [JSE:ARL] on Monday reported a 31% rise in diluted headline earnings per share to 635cs for the six months ended March 2011 from 486c a year ago.
Revenue was 2% lower at R4.21bn due to lower sales by the feed division, whilst the revenue from the poultry division was only marginally higher than the previous year.
However, operating profit grew 23% to R375.3m, with the improvement was all contributed by the poultry division due to improved poultry production efficiencies combined with lower feed input costs.
An interim dividend of 305c per share was declared, up 5% on a year ago
Headline earnings for the period increased by 31% to R242m as a result of improved operating profits.
The poultry division's turnover was up 1% at R2.8bn on the back of slightly lower selling volumes which were offset by improved selling prices.
Local poultry demand levels were negatively impacted by job losses during the past 18 months together with record levels of poultry imports due to the strong local currency and "classical" dumping.
Reduced stock levels before the festive season together with firmer sales during December resulted in marginally better pricing levels post the festive period.
The improvement in profitability was mainly supported by efficiency improvements in on-farm production results that, together with lower feed input costs resulted in advantageous production costs.
The non-recurring direct costs of an industrial action in the prior period also played a role in the improved results
The company said the implementation of the "new" Ross 308 genetic line has been fully integrated during March 2011 and the efficiency improvements of the new bird are in line with expectations.
The feed division's revenue decreased by 5% to R2.05bn mainly as a result of lower feed volumes both internally and externally together with lower selling prices on the back of lower grain prices procured during mid-2010. The reduced internal sales volumes were partly driven by reduced demand from the poultry division due to improved efficiencies.
Operating profit decreased by 12% to R133m and the margin at 6.5% were negatively affected by higher fixed costs per unit, resulting from reduced volumes.
The division's Zambian and Mozambican operations posted satisfactory results as both these operations increased profitability with signs of further improvement.
Looking ahead, Astral said the business environment for the next reporting period was not expected to be significantly different from the present. The global outlook remained that grains as a key cost driver for both feed and poultry production, would trade higher as soft commodity prices firm up due to tighter global soft commodities balance sheets.
The continued strength of the local currency should be favourable for high levels of poultry imports. The balance of local production and imported product against a stressed trading environment will be critical for pricing and profitability improvement, it concluded.