No shortage of chickens in South Africa

Astral Foods – one of South Africa’s largest chicken producers – says South Africa does not have a chicken shortage despite the outbreak of Highly Pathogenic Avian Influenza (bird flu).

Following its first ever yearly loss in the financial year ended 30 September 2023, the group said that it has made progress in the first quarter of the 2024 financial year (Q1 FY24), with its poultry division turning a profit.

This includes maintaining emergency backup generator capacity at its operations, even if lower load shedding stages allowed the group to save on diesel costs. However, there is still a significant diesel cost at the Standerton poultry processing plant due to municipal power supply issues.

The failure to provide state services could also be seen in the group implementing contingency plans to ensure uninterrupted water supply during water infrastructure failures despite it coming at a higher cost.

There was also normalised poultry sales mix due to a consistent bird size through the poultry processing plants. This was previously adversely affected during the “big bird era”, which lead to high levels of promotional discounting.

Crucially, the group averted a potential shortage of chicken due to the bird flu outbreak via the costly exercise of importing broiler hatching eggs.

The protocols for the voluntary vaccination against bird flu have also been published by government, with the registration of the necessary vaccines being focused on by the relevant authorities.

“On the back of depressed consumer spending, Astral has aligned broiler slaughter numbers in an effort to adapt to current market conditions, and remains committed to recovering input costs,” it said.

However, the group said that it shocked at a poutlry rebate strucuture recommended by the state-run International Trade Administration Commission (ITAC) due to the bird flu outbreak.

As reported by News24, the ITAC will implement rebates for bone-in and boneless chicken pieces at 25% and 30%, respectively. This would would reduce the import duty on boneless cuts from 42% to 12%, and 62% to 37% for bone-in products.

“No shortage of chicken has been experienced or expected in the local supply chain with industry production at normalised levels due to numerous contingency plans implemented,” the group said.

Financials

When looking at the group’s finances, it expects earnings to increase from the low level seen in the six months ended 31 March 2023.

The group expects its earnings per share and headline earnings per share to rise by at roughly 300% to 647 cents and 654 cents, respectively.

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