ASTRAL FOODS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1978/003194/06)
ISIN Code: ZAE000029757
Share Code: ARL
(“Astral” or the “Group”)

VOLUNTARY TRADING UPDATE AND INITIAL TRADING STATEMENT

VOLUNTARY TRADING UPDATE

With reference to the unaudited interim results for the six
months ended 31 March 2023, released on SENS on 22 May
2023, Astral had previously informed the market that a
significant cost impact from load shedding would continue
for the remainder of the financial year ending 30 September
2023. These costs included the additional cost of diesel
to power standby generators, costs associated with a
cutback in poultry production in order to catch up the
backlog in the slaughter programme, higher feed costs due
to older broilers, and overtime costs for the additional
shifts introduced in our poultry processing plants.

These costs amounted to R741 million for the six months
ended 31 March 2023 and forecasted R919 million for the
remainder of the financial year (forecast provided in May
2023 of R844 million). The cost to operate diesel
generators is now an embedded expense burden to the amount
of approximately R45 million per month. The total costs of
load shedding, including capital costs of R200 million, for
the Group for the financial year will amount to
approximately R1.9 billion. This has been the main reason
for the severe decline of Astral’s results for the year
ending 30 September 2023.

Astral can report that the backlog in the slaughter
programme, as a result of load shedding, was cleared by the
end of June 2023. Subsequently, broiler efficiencies have
normalised on targeted broiler age, live weight and feed
consumption. However, other factors have negatively
impacted the financial performance during the second half
of the financial period and are discussed in more detail
below.

Deep-cut promotional activity in the wholesale and retail
sectors on chicken has been extensive. Coinciding with the
above, Astral had to unfortunately pack “the big bird
format”, on the back of load shedding, into a very limited
product range which had to be discounted. This, together
with a normal slowdown in chicken consumption patterns over
the winter season, has seen poultry selling prices under
severe pressure. The selling prices for chicken have not
recovered input costs, including the significant load
shedding and other inflationary costs, creating a situation
where negative margins on poultry sales have been realised.
Astral has been forced to subsidise the above costs for a
prolonged period.

Further to the above, the South African poultry industry
is currently being ravaged by an outbreak of Highly
Pathogenic Avian Influenza (bird flu), with additional
costs being incurred by Astral as well as other producers
to cull broiler breeding stock in line with regulated
disease control measures. The losses extend beyond the
biological cost of the culled birds, but also include costs
relating to measures taken for the safe disposal of these
birds and biosecurity measures implemented aimed at curbing
the spread of the disease. The poultry industry, in both
the table egg and broiler sectors, has seen significant
losses as a new strain of bird flu (H7N6) has spread across
both Gauteng and Mpumalanga at an alarming rate. The bird
flu has already caused short supplies of table eggs into
the market, and it is expected that the supply of poultry
meat into the value chain could be affected negatively in
the coming months. The bird flu outbreak is the worst that
South Africa has witnessed and goes well beyond the impact
felt by the H5N8 bird flu in 2017. To date, the total cost
associated with the current bird flu outbreak amounts to
approximately R220 million.

INITIAL TRADING STATEMENT

In terms of the Listings Requirements of JSE Limited,
companies are required to publish a trading statement as
soon as they become reasonably certain that the financial
results for the period to be reported on will differ by at
least 20% from that of the previous corresponding period.

Astral, taking into account the above factors together with
prevailing market conditions, expects that earnings per
share (EPS) and headline earnings per share (HEPS) for the
year ending 30 September 2023, could decrease by as much
as 165%, amounting to a decline of 4 588 cents and 4 565
cents to a loss of 1 808 cents and 1 802 cents,
respectively, compared to the year ended 30 September 2022
(EPS of 2 781 cents and HEPS of 2 762 cents).

The Group’s balance sheet is geared to approximately 25%
to maintain sufficient liquidity and solvency. The banking
facilities do not have any covenant requirements.
The financial information in this announcement has not been
reviewed or reported on by the Group’s auditors.

Once the Board has reasonable certainty of the expected EPS
and HEPS ranges, a further trading statement will be
provided towards the end of October 2023.

Pretoria
21 September 2023

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