Astral Foods has posted a decline in first-half profits as lower poultry prices and higher feed costs weighed on earnings.
Despite reporting growth in revenue and volumes, the South African group said it had to subsidise poultry prices during the period to remain competitive.
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For the six months ended 31 March 2025, revenue rose 3.5% to R10.7bn ($593.5m), driven by increased volumes and higher selling prices in the group’s feed division.
However, operating profit fell by 50.7% to R271m, primarily due to margin pressure in the poultry business.
Revenue from Astral Foods’ poultry division inched up 1.5% to R8.8bn but the unit swung to a R26m operating loss, compared with a R284m profit a year earlier.
The group attributed the downturn to a 3.1% year-on-year decline in poultry selling prices, alongside rising feed input costs and higher operating expenses.
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By GlobalDataAccording to Gary Arnold, Astral Foods’ CEO, the company “subsidised the cost of producing chicken, as higher feed and other inflationary costs could not be passed on in selling prices due to a very competitive poultry market landscape”.
In March, the company also suffered a cybersecurity breach, resulting in unauthorised access to parts of its network.
Although Astral Foods said it responded “swiftly,” the poultry division experienced around two days of downtime, disrupting processing and deliveries and leading to financial losses of around R20m.
Broiler margins were described as “extremely thin,” declining to -1.1% from 2.4% in the first half of fiscal 2024. However, broiler sales volumes rose by 4.4% to approximately 5.6 million birds per week.
Looking ahead, Astral Foods warned of several challenges, including the ongoing threat of avian influenza and limited progress in approving vaccinations for breeding stock.
The broader economic environment also presents headwinds, Astral Foods said. Weakening growth, reduced infrastructure investment and sluggish job creation in South Africa are expected to dampen consumer demand.
Rising unemployment is further straining household spending, particularly on poultry products, the group added.
On the global front, Astral Foods added uncertainties surrounding South Africa’s trade benefits under the African Growth and Opportunity Act (AGOA) could disrupt export opportunities.
