Astral fighting off cheap imports

Astral Foods has seen a marginal increase in its revenue and operating profit, despite increasing cheap poultry imports and higher feed costs.

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Astral Foods, a JSE-listed integrated poultry producer, has seen a marginal increase in its revenue and operating profit, despite increasing cheap poultry imports and higher feed costs.

Astral’s revenue increased by 3% from R8,4 billion in 2010 to R8,6 billion in 2011, on the back of marginally higher poultry volumes (0,9%) and better selling prices (4,1%). Operating profit for the year increased by 15% from R585 million in 2010 to R675 million.

The operating profit margin was 7,8%, versus 7% in 2010. After shareholder approval, the company will distribute R8,10 per share, or 7% more than in 2010.

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Chris Schutte, Astral CEO, said the past year had seen tough market and trading conditions, with a strong rand driving imports of poultry meat, including “classic dumping” of Brazilian chicken. Despite this, Astral’s poultry division managed to raise its revenue from 4,6% to R5,6 billion.

Its feed division’s revenue remained stable at R4,2 billion. Although maize prices went up 30% year-on-year, the company’s feed costs went up by only 2%, thanks to forward procurement and improved feed conversion ratios with new Ross 308 genetics, which actually lowered the cost of feed per bird.

“Astral’s cash flow is excellent,” said a Rand Merchant Bank investment analyst who wished to remain anonymous. “The share price peaked at R132,50 this year and has gradually fallen about 12% to R119. The poultry industry is volatile but is definitely worth having in your portfolio.” – Robyn Joubert