In a May 16th 2022 release, Astral Foods Ltd. released financial results for the first six months of Fiscal 2022 ending March 31st. The Company is among the leading broiler integrators in the Republic of South Africa in addition to producing and distributing breeding stock (National Chicks) and the manufacture and sale of a range of animal feeds.
For the first half of 2022, net income was $35.6* million on total revenue of $597.4 million with a diluted EPS of $0.89. Comparable figures for the corresponding six months of 2021 ending March 31st 2020 were net income of $14.6 million on total revenue of $472.3 million with an EPS of $0.36. Gross margin increased from 18.2 percent for the first half of 2021 to 22.1 percent for the most recent period, denoting higher unit revenue on expanded volumes despite escalation in costs of feed, energy and power due to inflation. Operating margin increased from 4.5 percent to 8.3 percent and profit margin from 3.1 percent to 6.0 percent from the first half of 2021 to 2022 respectively
The release included comments on the two operating Divisions
Poultry
“Revenue for the Poultry Division increased by 28.6% to $497.8 million (March 2021: $378 million), driven by higher broiler sales volumes and selling prices.
Broiler sales volumes increased by 15.7% (36,067 tons), assisted by an additional 400,000 birds being processed per week under the expanded capacity as well as sales out of stock. Broiler volumes processed for the period under review equate to 5.9 million birds per week. The product mix was positively impacted by an increase in sales to the QSR sector and an increase in chill chicken sales relative to the comparable period.
Poultry selling prices improved on the partial recovery of higher input costs linked to an increase in feed prices and energy costs, with feed making up 70% of the cost of producing a live broiler. The broiler net margin rose to 4.7% from a negative margin reported for this segment in the comparable period (March 2021: -0.2%).
A change in the broiler feed program to a lower nutrient density (and hence lower feed cost) in February 2021, has partially offset a significant increase in feed ingredient costs for the period under review.
Operating profit for the Poultry Division increased by 627.2% to $28.2 million (March 2021: $3.8 million), and the operating profit margin increased to 5.7%, compared to a profit margin of 1.0% achieved in the comparable period.
Total poultry imports remained high, with the average monthly total poultry imports for the period under review equaling approximately 24% of local consumption, at an average of 37,348 tons per month”.
Feed Division
“Revenue increased by 13.8% to $283.6 million (March 2021: $252 million) as a direct result of higher selling prices on the back of increases in raw material costs. SAFEX yellow corn prices increased to an average of $238 per ton for the period under review (March 2021: $214 per ton).
Feed sales volumes in the division increased by 7.6% supported by both an increase in internal and external sales growth. Internal sales volumes increased by 10.8% largely on higher broiler feed sales due to an increase in broiler slaughter numbers. External sales volumes increased by 2.5% on higher sales into the pig and poultry sectors.
The operating profit for this division increased by 2.9% to $17.1 million (March 2021: $16.7 million), with a decrease in the operating profit margin to 6.0% as a result of the increase in the revenue line on higher raw material costs and resultant increase in feed selling prices (March 2021: 6.7%). The Division benefited from well-controlled expenses and effective raw material cost recovery”.
Astral Foods listed assets of $512.9 million, including $11.5 million as goodwill and intangibles, against long-term debt and other obligations of $6.6 million. Market capitalization on the JSE attained $472.7 million on May 20th. Astral Foods share price increased from $11.6 on May 16th pre-release to $11.96 on May 20th. For the six-month period the Company attained a 19.4 percent return on assets and 24.9 percent on equity.
* Conversion ZAR15.87 = USD1