Astral Foods delivers strong FY2025 earnings despite fragile broiler margins

Core Viewpoint - Astral Foods Limited reported significant financial improvements for FY2025, driven by volume recovery and effective cost management, leading to increased earnings and dividends [1] Financial Performance - Group revenue increased by 10.4% to R22.6 billion from R20.5 billion, primarily due to higher broiler slaughter volumes and improved selling prices in 2H2025 [2] - Profit before interest and tax (PBIT) rose by 10.9% to R1,247.4 million, with underlying operating profit increasing by 42.8% when excluding R251.6 million in one-off insurance recoveries from FY2024 [3] - Earnings per share (EPS) grew by 16.2% to 2,276 cents, and headline earnings per share (HEPS) increased by 14.2% to 2,193 cents, with total dividends for the year reaching 1,100 cents per share, a 112% increase [4] Operational Highlights - Broiler slaughter volumes averaged 5.8 million birds per week, up from 5.4 million, with a significant recovery in broiler net margin from -1.1% in 1H2025 to +3.9% in 2H2025 [6] - The Feed Division reported a 31.1% increase in operating profit to R713.8 million, with its operating profit margin improving from 5.5% to 6.6% [5] Challenges and Risks - The poultry sector continues to face thin margins, with a total broiler net margin of just +1.5% for FY2025, which is vulnerable to market fluctuations [8] - Cost pressures, including R161.2 million from load shedding disruptions, and rising feed costs, particularly yellow maize prices, remain significant challenges [9] - Ongoing risks include bird flu, subdued economic growth in South Africa, and regulatory uncertainties from the Competition Commission poultry market inquiry [10]