S.Africa's Astral Foods swings to loss on $109 mln electricity, bird flu hit

South Africa's biggest poultry producer Astral Foods (ARLJ.J) swung to a full-year loss on Monday, as an ongoing electricity crisis and the country's worst bird flu outbreak cost the company 2 billion rand ($108.9 million).

Astral reported a 621 million rand operating loss in the full-year ended Sept. 30, compared to a 1.4 billion rand profit last year. Its flagship poultry division's 1.38 billion rand loss was partly offset by a 759 million rand profit from its feed division, which saw 12% revenue growth.

The company said group revenue was flat at 19.3 billion rand but 1.6 billion rand costs associated with lengthy planned power outages, locally known as loadshedding, ate into income. Power cuts disrupt slaughter programmes and increase the cost of stock feed as chickens remain on farms longer.

During power outages, businesses use diesel-powered generators as an alternative, driving costs higher.

The company processed an average of 4.9 million chickens during the 2023 financial year, 16% lower than 5.8 million birds per week the previous year.

Astral said the outbreak of a high-pathogenic avian influenza (HPAI), a bird flu which spreads rapidly in an infected flock causing a high death rate, had cost the company 400 million rand.

"Bird flu remains a major risk to the local poultry industry, however progress is being made towards approvals for voluntary vaccination of broiler breeding stock," Astral said.

Last week, South Africa's agriculture ministry said the bird flu, which has resulted in the culling of about 8.5 million chickens - a third of the national flock - was now under control.

($1 = 18.3689 rand)

This article oiginally appeared on Reuters

Image from Astral Foods Ltd