Astral benefits from higher prices and lower feed costs. After a strong year, the poultry producer says its near-term prospects can be

regarded as a mixed bag of negative and positive factors.

Astral Foods has reported vastly improved full-year results after a confluence

of actors worked in its favour. Higher selling prices for its chickens,

stronger volumes and lower feed raw material costs helped the poultry producer

almost double headline earnings for the year to end-September.

Astral's feed division posted a 16.7% rise in operating profit to 457 rand

million. It said contributions from its operations in the rest of Africa also

continued to improve, with operating profit increasing by 18.5% to 32 rand

million. Despite an increase in working capital and higher capital

expenditure, it still had surplus cash of 789 rand million at the end of the

period, putting it in a favourable position to fund its final dividend and

part of its capacity expansion capital programme over the next three years. It

plans to spend 1.1 rand billion to expand its production capacity by an estimated

20% from current levels.

Overall revenue rose 4.5% to 13 rand billion in the year to end-September and

profit before interest and tax improved by 79% to 1.94 rand billion. Headline

earnings per share jumped 94% to 3,712c and it's declared a final dividend of

1,050c, taking its total dividend for the year 94% higher to 2,050c. Its net

asset value per share increased by 23% over the year to 96.06 rand.

The group said while imports from the European Union fell over the period due

to the outbreak of highly pathogenic bird flu, there was a swing in imports

towards Brazil and the US. It said the local poultry industry hasn't seen any

incidents of bird flu since May and it experienced no loss due to the disease

during the period under review.

For the period ahead, it said a rise in raw material prices would impacts feed

costs, while the negative impact of high fuel prices on consumer disposable

income would put pressure on selling prices. While the proposed minimum wage

legislation would increase poultry production costs, it said it could

positively support higher levels of consumer discretionary spend.

Astral's view on the near-term prospects can be regarded as a mixed bag of

both negative and positive factors, which could potentially have an influence

on its business performance," the poultry producer said.

Its shares slipped 5.7% to 185.64 rand yesterday.

#AstralFoods reports record earnings for the year ended 30 Sept 2018.

Revenue up 5% to R13.0bn, operating profit up 79% to R1.9bn, cash operating

profit up 50% to R2.2bn and HEPS up 94% to 3712c. Total dividend is 2050c, a

94% increase. pic.twitter.com/qGHA51IosT

-- KRIS (@KeyterRech) November 19, 2018