South African poultry producer Astral Foods has warned investors of a decline of as much as 92% in earnings for the six months to 31 March, as the impact of load-shedding hits food producers countrywide.
Astral Foods announced in a statement on 3 May that there was "reasonable certainty" that its earnings per share (EPS) and headline earnings per share (HEPS) were forecast to drop by between an astounding 87% and 92% for the period.
The company had already warned of an anticipated drop in revenue in January, as the impact of Stage six load shedding rippled through the country.
At least 10 million day-old chicks were culled in the egg and poultry industries across the country at the time as a result of ventilation shutdowns due to stage six.
Astral Foods CEO Chris Schutte said then that the company was forced to "subsidise" the increased cost of production due to "the demise of South Africa's basic infrastructure, specifically electricity and water supply."
This has made it "almost impossible" to trade profitably, he said.
The company estimated that the cost of load-shedding at its operations was around R138 million in 2022, and that the cost to produce chicken now exceeds the selling price by at least R2 per kilogram.
Challenges facing local chicken producers have only compounded in recent years with the onset of load shedding, adding to their battle against the flood of dumped bone-in chicken imports from Brazil and the US.
In 2022, the US accounted for 49.6% of SA's bone-in chicken imports, and volumes have increased this year.
According to advocacy group FairPlay, the US is allowed to import a substantial annual quota free from the anti-dumping duties that would otherwise have applied.
Anti-dumping duties (of R9.40/kg) have been in force since 2000, and they apply to imports of bone-in portions such as leg quarters from the US.
The duty-free quota was forced on South Africa by US negotiators during the finalisation in 2015 of the African Growth and Opportunity Act trade agreement between the two countries.
