Africa-Press – South-Africa. ASTRAL Foods’ share price shot up 8.6 percent yesterday morning, after it announced that earnings and headline earnings were expected to increase by at least 100 percent in the six months to March 31, 2022.
The integrated poultry producer said in a trading update that headline earnings per share would be at least 1 194 cents for the interim period, compared with 597c for the comparative period in 2021.
Earnings a share would be at least 1 184 cents compared with 592c in the comparative period in 2021. The share price traded at R184.77.
The positive update also generated chatter on Twitter with for instance @fintasticdata saying the company had a few red flags in 2021, including return on assets down 20 percent, leverage increased 13 percent, liquidity was down 3 percent and its gross margin was down 9 percent.
Also on Twitter, @smalltalkdaily remarked: “The sparkly H1 trading update confirms my stance on a great update as does the company’s more cautious H2 outlook, which I also anticipated would occur due to a rising input cost.”
Part of the reason for the strong update was that the comparative figures of 2021 were negatively impacted by the Covid-19-related lockdown impact on the economy and the resultant constrained consumer spending.
The company produces and supplies animal feeds, broiler genetics, breeder and broiler production and does the sale of chicks.
“At the time, Astral’s poultry operations could not recover significant increases in feed costs through the selling price of poultry products, resulting in a relatively low base against which the expected results for the interim period are compared,” the company said yesterday.
It said the performance of the first quarter of the 2022 financial year reflected an improvement in poultry margins. This was mainly due to higher poultry sales volumes and improved net selling prices.
The first quarter earnings were also likely to continue through to the second quarter, and should deliver the expected Eps and Heps profiled above, the group said.
The interim results are expected to be released on May 16.
Astral will likely be able to offset some of the rising input costs this year with higher product prices. The Pietermaritzburg Economic Justice and Dignity Group said last month that rising fuel, electricity and local climatic and agricultural sector constraints would likely push up food prices.
Its data, gleaned from a range of retail stores servicing lower income groups, showed that the price of frozen chicken portions, a staple protein source for lower-income families, had already increased 17 percent between January 2021 and January 2022, well above the inflation rate.
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