An unchanged interim dividend of 260 cents per share was declared.
Revenue was up 18% to R4,462 billion largely due to the increase in agricultural input costs, while operating profit declined 32% to R279 million. The group said Animal Nutrition was down 37% and Poultry down 25%. The operating margin dropped from 10.8% to 6.3%.
The group, with key activities in animal feeds and various broiler operations, said it has continued to experience tough trading conditions over the past six months.
CEO Chris Schutte said Astral reported a strong recovery in profitability compared to the preceding six months, despite the substantial increases in feed costs.
"Since March 2009 we have already seen feed costs come down, which should result in an improvement in operating profit for the next six months." The increase in revenue of 18% was contributed by both divisions," he said.
The group's Poultry Division produced revenue growth of 13% to R2,9 billion despite sales volumes being 7% lower than the comparative period.
The reason for this, Schutte said, was that Astral Foods took a decision to reduce the slaughter age of the birds as a result of high feed costs. This decision unfortunately had a negative impact on the volumes of both the Poultry and Animal Nutrition Division.
Operating profit declined by 25% to R137 million with the operating margin dropping from 7.1% to 4.7%. Schutte commented that the increases in the selling price of poultry meat were not sufficient to recover the increase in feed costs, which resulted in the decrease in the operating margin.
The Animal Nutrition Division reported revenue growth of 23% to R2,7 billion for the current six months. High agricultural input commodity prices, 20% higher than the previous period, remained the main reason behind the increase. Volumes for the period were however down by 10%.
Operating profit decreased by 37% to R142 million.
"We took a conservative view on the procurement of raw materials due to volatility in the international markets towards the end of 2008 and as a result, we could not benefit from the fall in the maize price, immediately.
This also impacted the operating profit margin, dropping to 5.3% from the 10.2% margin reported at the 2008 interim period," Schutte explained.
The Zambian operations reported a foreign currency loss of R7,5 million due to the weakening in the local currency.
Astral Foods' finance costs increased from R17 million for the six months ended March 2008 to R30 million for six months ended March 2009 The average level of debt was higher as result of having higher raw material stock levels during the period due to the uncertainty and volatility in the markets.
Cash flow from operating activities coming in at R167 million, was marginally lower than the previous comparable period's R175 million.
"We indicated to the market that the significant decline in agricultural commodity prices will benefit the Group in the second half of the year. We are also experiencing more stability in the poultry market which should also lead to improved earnings for the year. Given this, we are well on track to meet our forecasts to exceed earnings for the previous year," concluded Schutte.
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