Astral Foods reports 14% drop in headline earnings

Astral Foods, a leading South African poultry producer, has faced a tumultuous year marked by the impact of the COVID-19 pandemic and other challenges. In a recent interview with CNBC Africa, Chris Schutte, the CEO of Astral Foods, shared insights into the company's performance and the road ahead. The key theme that emerged from the discussion was the significant challenges Astral Foods faced due to the pandemic, particularly in managing costs and navigating disruptions in the poultry market. Schutte highlighted the impact of COVID-19 on the business, emphasizing the direct and indirect costs associated with the pandemic. The company incurred approximately 40 to 42 million rand in direct costs related to implementing safety protocols and protective measures in its operations. Additionally, Schutte discussed the indirect costs stemming from the closure of the Quick Service Restaurant (QSR) market, which accounts for 20% of locally produced chicken consumption in South Africa. The sudden shutdown of the QSR market led to an oversupply of chicken, prompting Astral Foods and its competitors to freeze excess stock and offer discounts to clear inventory. Despite these challenges, Schutte expressed optimism about the future, citing Astral Foods' strong balance sheet, prudent financial management, and commitment to shareholder value. The company's decision to pay dividends in a challenging economic environment signals confidence in its financial position and growth prospects. Looking ahead, Schutte acknowledged the tough road ahead due to rising input costs and consumer pressure but assured stakeholders that Astral Foods is well-positioned to weather the storm and remain a reliable dividend payer. The discussion also touched on the issue of poultry imports, with Schutte highlighting concerns about dumping from South America and advocating for higher import tariffs to protect the local industry. Overall, Astral Foods' resilience and strategic focus position the company for long-term sustainability and growth in the face of ongoing challenges in the poultry market.