Astral Foods expects 90% plunge in profits as power crisis hits poultry production
Astral Foods said on Wednesday it expects a 90% plunge in mid-year profits, citing rolling power cuts that have hit production and hiked costs.
One of the country's largest poultry firms, Astral processes nearly 6-million chickens per week and accounts for about a quarter of the country's broiler meat production. The company supplies chicken meat to top fast-food brands as well as wholesale and retail outlets in the country.
It expects headline earnings per share (HEPS) — the main profit measure in South Africa — to drop to R1.42 in the six months to March 2023, from R14.20 during the same period a year earlier.
“The poultry division has experienced severe operational disruptions through 1Q2023 due to Eskom load-shedding. This has continued and led to abnormal additional costs, as well as substantial production cutbacks of at least 12-million broiler placements for the 1H2023,” Astral Foods said in a trading update.
Ageing coal-fired power stations, corrupt coal procurement deals and criminal sabotage have affected Eskom's capacity to supply adequate electricity to businesses and households, which are having to go for as long as 10 hours without power.
Erratic electricity supplies affect poultry ventilation systems, slaughter schedules and chicken processing. Delayed slaughter schedules also lead to additional feeding costs.
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