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ASTRAL FOODS LIMITED - Voluntary operational update

Release Date: 05/02/2019 07:05
Code(s): ARL     PDF:  
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Voluntary operational update

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

VOLUNTARY OPERATIONAL UPDATE

Astral Foods’ operating profit for the first quarter of
its 2019 financial year ended 31 December 2018, was
significantly lower than the corresponding period in the
previous year, and will have a negative impact on the
results to be reported for the six months ending 30 March
2019.

When comparing the current Astral Foods’ first quarter
results with that of the previous year, it must be noted
that the previous year’s results for the same period were
at a record historical high, benefitting at the time from
low feed costs following a record maize crop for the
2016/2017 marketing year, whilst selling prices for
poultry products were stronger due to the negative impact
of Avian Influenza resulting in the short supply of
broilers to the market.

During the September 2018 year-end results presentation,
Astral Foods indicated in its outlook for the 2019
financial year that raw material prices were in an upward
trend and consumer disposable income was under pressure.
This has now manifested itself, with the lack of
widespread rains particularly in the central and western
parts of the maize producing areas following an El Nino
weather pattern, resulting in upward pressure on maize
prices which will lead to a material increase in feed
costs for the 2019 financial year. Higher feed input
costs and depressed poultry selling prices have resulted
in significant pressure on profit margins.

Disappointing consumer spending during the Astral Foods’
first quarter for its 2019 financial year, and in line
with reports from a number of retailers, together with
high poultry stock levels at the end of Astral Foods’
2018 financial year, resulted in average selling prices
below that of the comparative period. Higher sales
volumes during the first quarter culminated in a
reduction in Astral Foods’ poultry finished goods stock
levels at the end of December 2018.

Despite the current trading conditions, Astral Foods is
continuing with its strategy to upgrade and expand the
Festive processing plant located in Midrand. The
upgraded facilities will provide additional capacity for
value-added and fresh products, where supply has been
hampered in the past due to Astral Foods’ capacity
constraints.    The initial phase of the project is
expected to be completed during 2020.

The above information has not been reviewed or reported
on by Astral Foods’ auditors.

Pretoria
5 February 2019

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

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