Astral rewards shareholders generously
By Andries Mahlangu - May 14th, 13:33
Poultry producer Astral Foods rewarded its shareholders handsomely, as the cycle in the industry turned in its favour, boosting its earnings markedly in the six months to end-March.
The company declared an interim dividend of R10 per share, which was nearly six times higher than the R1.80 shareholders received a year ago.
The generous dividend payout came as headline earnings per share (HEPS) rose 455% to R19.74, as the company reaped the benefits of low input costs, and higher sales volumes and poultry selling prices.
In the matching period a year ago‚ Astral encountered abnormally high feed costs‚ which did not occur in the current period.
"Astral benefited significantly from the favourable trading conditions during this reporting period, in comparison to a period that saw one of the lowest profits in Astral’s history," CEO Chris Schutte said in the company’s results statement.
Group revenue was up 15% to R6.7bn as a result of improved poultry supply and demand balance, which the company said gave it both volume and price support.
Group operating profit surged 392.6% to R1.044bn, as the poultry division improved markedly, fattening the operating margin to 15.7% from just 3.7%.
Revenue for the feed segment was down 10.2% to R3.1bn, courtesy of lower feed selling prices that resulted from lower maize prices after SA harvested a record maize crop in 2017.
But sales volumes in the feed segment still rose due to higher external sales and a higher internal feed requirement, according to the results statement.
Higher external sales volumes (7.4%) referred to livestock sectors that recovered following the high feed costs associated with the 2016 drought, the company said.
Internal sales increased (7.2%) due to a higher internal feed requirement as broiler placement numbers increased year on year.
This led to operating profit increasing 3.8% to R192m in the feed segment, which helped push the operating margin to 6.2% from 5.3%.
Astral competes with RCL Foods, although the latter company has a diversified portfolio.
Before the recovery, the poultry industry had a particularly rough ride due to the drought that resulted in higher grain prices, which in turn resulted in higher input costs.
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