Astral Foods | Price pressure
Astral Foods (ARL) released strong H1 '18 results with diluted HEPS up 456% yoy to 1 972cps. The poultry division made a profit of R835m, compared to R22m last year, with a combination of lower costs and higher selling prices. Maize costs will stay low into 2018/19. However, poultry prices will come under pressure. Rising imports and local production pose a risk to the local market balance. Competition from cheap pork is also a threat. ARL are increasingly efficient poultry producers, but the current record high poultry margin is unsustainable in our view.Astral Foods is a poultry producer. Co. is engaged in manufacturing of animal feeds, broiler genetics, production and sale of day-old chicks and hatching eggs, breeder and broiler production, abattoir and further processing operations and sales and distribution of various key poultry brands. Co. has four broiler production, processing, distribution, sales and marketing operations, which include: Festive (Olifantsfontein), County Fair (Western Cape), Goldi (Standerton) and Mountain Valley (Camperdown). Co. has three operating segments, Poultry, Feed, and Other Africa.
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