South African poultry producer Astral Foods has issued a profit warning, predicting a substantial decline in half-year profits due to various challenges, including a recent cybersecurity breach.
The company revealed that a cybersecurity incident on 16 March disrupted its poultry division, resulting in processing downtime and delayed customer deliveries.
Despite the company’s swift response, the incident led to significant revenue losses.
Furthermore, the costs associated with clearing a production backlog have impacted group profits by approximately R20 million ($1.1 million) during this reporting period.
In its trading update, Astral indicated “reasonable certainty” that earnings per share (EPS) and headline earnings per share (HEPS) for the six-month period ending 31 March 2025 will decline by up to 55% and 60%, respectively.
This translates to an anticipated EPS of 415 South African cents and HEPS of 354 cents, compared with the previous year’s EPS of 923 cents and HEPS of 884 cents.
During its November 2024 year-end results presentation, Astral emphasized that declining chicken prices “would continue to place severe pressure on broiler net margins.”
The constrained consumer environment and extensive retail promotions on frozen chicken have kept selling prices under pressure for the six months ending 31 March 2025.
Additionally, rising poultry feed input costs, driven by the drought of 2024 and higher local maize prices, have further contributed to lower earnings for the first half of 2025 compared to the period ending 31 March 2024.
Despite these challenges, Astral noted that its balance sheet “remains strong,” supported by “healthy cash generation.”
The company is committed to “strengthening” its financial position and practicing “prudent” working capital management, maintaining a net cash position in the first half of the financial year 2025, in contrast to a net debt position in the first half of 2024.
For the 12 months ending September 2024, Astral reported a profit after tax of R753 million, a significant improvement from the annual loss of R512.2 million in 2023.
In addition, Astral achieved revenue of R20.48 billion, marking a 6.4% year-on-year increase.
The poultry division contributed 82.6% of external revenue, while the feed division accounted for 17.4%. Nevertheless, the company recorded an annual loss of R512.2 million.
Last month, Gary Arnold took over as CEO, succeeding Chris Schutte, who announced his retirement in 2024.
Arnold has been with Astral for 28 years, holding the positions of chief operating officer and executive director since 2012.
