Feed price fall promises boost for South African poultry firm

By Oli Haenlein

- Last updated on GMT

Lower maize prices look set to benefit Astral's profit margin
Lower maize prices look set to benefit Astral's profit margin

Related tags: South african poultry, South africa, Poultry

South African poultry company Astral Foods expects a boost, due to lower maize and soya prices, according to Investec research.

The report said Astral anticipated a meaningful increase to its poultry section’s profitability due to the fall in feed prices, while it believed the imposition of anti-dumping penalties on some EU imports should also prove to be positive.

Furthermore, the Investec document cited import protection as a factor benefiting the company: "Declining feed costs and further import protection, and therefore reduced industry supply, should see Astral’s poultry unit lift profitability quite materially."

The company is now targeting a 7% poultry unit operating margin, up from 5% previously, and earnings estimates have been upgraded.

However, the research suggested there were issues that Astral needed to remain weary of. The report continued: "There are a number of factors outside of management’s control that could affect the possibility of achieving our target price.

These include the sustainability of import protection, the level of the South African rand and key soft commodity prices and the overall level of consumer demand in South Africa."

Related topics: Meat

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