Astral Foods, a multi-segment company and the largest broiler producer in the Republic of South Africa, posted results for the first half of Fiscal 2023 ending March 31st. For the period, the company posted a profit of $3.27 million on revenue of $524.41 million with a diluted EPS of $0.09. For the corresponding first half of Fiscal 2022, revenue was $496.17 with a profit of $29.57 million and a diluted EPS of 0.72. Gross margin declined to 13.9 percent compared to 22.2 percent during the first half of Fiscal 2022. The operating margin declined to 1.0 percent from 8.3 percent and profit margin was 0.6 percent compared to 6.9 percent for the corresponding first half of Fiscal 2022.
The broiler operation reported a loss of $14.9 million compared to a profit of $24.5 million for the first half of FY 2022. Feed for hogs and poultry including internal consumption for broilers and outside sales generated a profit of $20.1 million compared to $15.5 million during the first half of FY 2022. During the first half of 2022, feed ingredients increased by 30 percent in price.
Management attributed the decline in performance to interruption in power supply due to deficiencies in the grid and the failure of the government to invest in new generating capacity and to maintain obsolete coal-fired plants. Other problems encountered by the company in common with all industrial and farming enterprises in South Africa included water supply, the cost of labor, fuel and an unfavorable operating environment.
The South African broiler industry is impacted by relatively lower cost imports from Brazil, the U. S. and the E. U. These nations can land and sell chicken cheaper than domestic production despite punitive tariffs to protect the domestic industry.
In 2022, the U. S. exported 55,449 metric tons of bone-in chicken to the Republic of South Africa valued at $54.8 million. These figures were respectively 21 percent lower in volume and 14 percent lower in value compares to 2021. For the first seven months of 2023, the U. S. exported 30,994 metric tons of bone-in chicken to the Republic of South Africa valued at $29.9 million. These figures were both 21 percent lower in volume and value compared to the corresponding months in 2022.