ASTRAL FOODS LIMITED - Trading Statement & General Trading Update

ASTRAL FOODS LIMITED
'Astral Foods' or 'the Group'
(Reg. No. 1978/003194/06)
(Incorporated in the Republic of South Africa)
Share Code: ARL
ISIN Code: ZAE000029757

TRADING STATEMENT & GENERAL TRADING UPDATE

1.       TRADING STATEMENT


Shareholders of Astral Foods are advised that a reasonable

degree of certainty exists that, for its 2022 financial

year ended 30 September 2022 ('2022 financial year'):


     '   Earnings per share is expected to increase between

         118% and 128% compared to the year ended 30 September

         2021 ('prior comparable year'). This implies that

         earnings per share is expected to be between 2 670 and

         2 793 cents per share (30 September 2021: 1 225 cents
         per share); and


     '   Headline earnings per share is expected to increase

         between 118% and 128% compared to the prior comparable

         year. This implies that headline earnings per share

         is expected to be between 2 677 cents and 2 799 cents

         per share (30 September 2021: 1 228 cents per share).


The above earnings growth is measured against a low base

in the prior comparable year that was severely impacted by

COVID-19 related lockdowns that adversely affected the

South African economy and poultry consumption patterns.

During the prior comparable year, Astral Foods could also

not recover (the then) severe increases in feed costs in
the selling price of poultry.


During the 2022 financial year the improved earnings were
achieved mainly as a result of:


     '   increased poultry sales volumes on the back of

         substantial capital investments made to increase

         Astral Foods' poultry production and processing

         capacity, resulting in improved economies of scale

         benefits throughout the Group's integrated value
         chain; and


     '   improved poultry margins, realised through efficiency

         improvements in the broiler production value chain,

         as well as the partial recoupment of higher feed raw
         material and elevated energy input costs.


It is expected that the results for the 2022 financial year

will be published on SENS on or about Monday, 21 November 2022.

2.    GENERAL TRADING UPDATE


Notwithstanding the good performance outlined above for the

2022 financial year, the performance for at least the next

six months ending 31 March 2023 will be negatively impacted
by:


'    Extraordinary high feed input costs where this

     component makes up 70% of the cost of producing a live

     broiler. SAFEX maize is trading at record highs
     following international coarse grain prices,

     exacerbated by a weak and volatile local currency

     against the US dollar. The current outlook is for

     continued high soft commodity prices deep into Astral
     Foods' 2023 financial year.


'    The Group's broiler operations are not able to fully

     recover record high feed input costs through the

     selling price of poultry. Currently Astral Foods is

     'subsidising' the record high input costs in current

     poultry selling prices to both its customer base and

     the consumer. This scenario cannot be sustained and

     will unfortunately lead to further poultry selling
     price inflation.

'    The Group is experiencing severe operational

     disruptions on the back of Eskom load shedding. This

     is having an adverse impact on operational efficiencies

     and adding abnormal costs to the business. Production

     cutbacks have already been implemented from October

     2022 to partially manage the impact of load shedding

     which severely impacts Astral's 'just in time'

     integrated poultry production and processing chain.


'    In addition, the delay in the implementation of anti-

     dumping duties and the continued dumping of poultry

     products on our shores, water supply disruptions and

     the further escalation of energy input costs will all

     have a negative bearing on the outlook for the 2023
     financial year.


'    The current operational scenario as articulated above

     will contribute to the complete erosion of the already

     below average broiler profit margins of the recent
     past.


Accordingly, the level of earnings the Group expects during

the first half of 2023 financial year, is likely to be

considerably down against the prior comparative period.


The Group's balance sheet position is healthy with good
levels of liquidity in place.


The Board will provide further updates as additional
information becomes available.


The financial information in this announcement has not been
reviewed or reported on by Astral Foods' auditor.

Pretoria
27 October 2022


Sponsor:    Nedbank Corporate and Investment Banking, a
division of Nedbank Limited

Date: 27-10-2022 12:00:00

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