Advertise with fastmoving.co.za
 
 

The poultry producer rids itself of a noncore asset.
The poultry producer rids itself of a noncore asset.

Astral sharpens its focus on poultry operations

FMCG SUPPLIER NEWS

By Palesa Vuyolwethu Tshandu - Oct 4th 2017, 10:26

Southern African integrated poultry producer Astral Foods is ridding itself of a noncore asset in an effort to sharpen its focus on its poultry business. 

Astral reported on Wednesday that it had sold off its stake in animal nutrition business Provimi to US-based food and agriculture company Cargill for an undisclosed amount.

The group could not comment on the acquisition, a spokeswoman for Astral said, citing a closed period.

However, she described the cost of the acquisition as "immaterial" in terms of the JSE’s listing requirements. But Phibion Makuwere, a financial analyst at Intellidex, said the group may be more likely to make more acquisitions within the poultry business.

Given the conditions, many smaller poultry farms had closed shop, he said.

This suggested the sector was ripe for consolidation, "so they will be looking for opportunities and if the price is right, they will definitely buy", Makuwere said.

The group, which previously owned 25% of the Provimi-branded Cargill Premix & Nutrition as part of a joint venture with the US company, announced it had entered into a five-year premix supply agreement, with Cargill supporting Astral technically. Astral’s poultry operations contribute 54.2% towards group revenue, while the nutrition business including other poultry operations from the rest of Africa contributed 3.1%, according to Bloomberg data. The group’s animal feed business contributed about 30%.

In terms of profitability, the animal feed business was a high-margin business, Makuwere said.

"I’m surprised that they are disposing of the interests.... It’s more stable, so whether there is a drought or not, they can maintain their margins in that unit, because you can pass on the costs to the consumer."

The group’s share price closed 3.54% higher at R179.66 at the JSE on Tuesday.
© BusinessLIVE MMXVII 

Read more about: poultry sector | poultry | astral foods

Related News

How imports threaten survival of SA’s small chicken farmers
06/05/2019 - 14:39
The SA Poultry Association has warned that more local chicken farmers could soon go out of business due to cheap Brazilian imports.

Chicken prices may spike by up to 32% due to tariff increases, says importers
18/04/2019 - 09:22
Increasing tariffs on imported poultry products could hike chicken prices by up to 32%, says consumer bodies and importers and exporters organisation.

SA poultry industry wants hefty increase in tariffs to protect local industry
17/01/2019 - 13:20
The South African poultry industry has defended its application for a hike in import tariffs of frozen chicken portions to 82%, saying the cheap chicken imports mainly from Brazil hurt the competitiveness of local producers.

Meat and poultry consumption on the rise in Africa
17/07/2018 - 14:54
The meat and poultry market in West Africa grew to 6.5M tonnes in 2016. In value terms, it stood at $16.1B, which was at the level of the previous year. Market size upturned from 2007 to 2014, with mild fluctuations, followed by an abrupt decline in 2015 and stabilisation in 2016.

Astral rewards shareholders generously
14/05/2018 - 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.