Astral Foods saw a decline in first half profits as poultry prices fell and revenue weight increased.
Despite reporting revenue and volume increases, the South African group said poultry prices must be subsidized over the period to remain competitive.
For the six months ended March 31, 2025, revenues rose 3.5% to R1.07 billion ($593.5 million).
However, operating profit fell by 50.7% to R271m, primarily due to margin pressure in the poultry business.
Revenue from Astral Foods’ poultry sector rose 1.5% to R8.8 billion, but the unit shook an operating loss of R26M compared to previous year’s profit.
The group was attributed to an increase in feed input costs and increased operating expenses, as well as a recession fell 3.1% year-on-year.
According to Gary Arnold, CEO of Astral Foods, the company “subsidized the cost of producing chickens because it was unable to take over higher feed and other inflation costs at sales prices due to the highly competitive poultry market landscape.”
In March, the company also suffered a cybersecurity breach, resulting in unauthorized access to parts of its network.
Astral Foods said it responded “quickly” but the poultry department experienced about two days of downtime, disrupting processing and delivery; Around R20m.
Broiler’s margins were described as “very thin,” falling from 2.4% to -1.1% in the first half of fiscal year 2024. However, broiler sales volume increased 4.4% a week to around 5.6 million birds.
Looking ahead, Astral Foods warned of several challenges, including the ongoing threat of bird flu and limited developments in approval of breeding stock vaccinations.
The broader economic environment also presents headwinds, Astral Foods said. Slow growth, reduced infrastructure investments and slower job creation in South Africa are expected to weaken consumer demand.
The rising unemployment rate has further strained household spending, particularly on poultry products, the group added.
Globally, Astral Foods has added uncertainty surrounding South Africa’s trade interests under the African Growth and Opportunity Act (AGOA).
“Rises in feed costs and lower poultry prices came from Astral Foods’ first half revenue” was originally created and published Just fooda brand owned by GlobalData.
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