South African poultry and feeds integrator Astral Foods looks set for a strong second half, after a confident 12% hike in the interim dividend for the period ending March 2010.
The group endured a tough 6 months - especially on the poultry side – with turnover dropping 4% to R4.3 bln (€416.4 mln).
Astral Foods CEO Chris Schutte noted the company only experienced the impact of the downturn in the local economy during the festive season. "For the first time in 5 years, our traditional consumer did not benefit from bonus payments."
Management, though, built up the trading margin to just over 7%, allowing operating profits to edge up 9% to R304 mln (€32.6 mln).
Schutte was pleased with Astral's overall operating profit margin improving - an exceptional achievement, he reckoned, in the light of the competitive environment.
With finance costs slashed, Astral showed a heartening 16% jump in after tax profits to R189 mln (€20.27 mln).
Feed outperformed poultry
On a divisional basis it was the resurgent Feeds division that offset a weaker performance from the larger poultry division. Although revenue was up 3%, the poultry division reported operating profits down 2% to R134 mln (€14.36 mln).
On the poultry side, Schutte said depressed consumer spending over the December festive period - exacerbated by higher levels of poultry product imports from Brazil and Argentina - resulted in unprecedented high poultry stock holdings across the entire poultry market.
The feeds division turned a 10% decline in top-line into a 10% gain at operating profit to R151 mln (€16.18 mln). Schutte said the improved operating profit and margin in the feeds division was achieved through higher sales volumes and better capacity utilisation.
The continued favourable grain and agricultural commodity prices were set to benefit chicken production costs. "We are expecting better trading conditions in the second half of the 2010 financial year-end," Schutte said.
Although any recovery in the consumer spending would lead to a higher demand for poultry products, he cautioned that the strength of the rand could boost chicken import levels.