S.Africa's top poultry producer Astral recovers after bird flu outbreak

South Africa's largest poultry producer Astral Foods will bounce back to profitability in the half-year to March 31 as the impact of the country's devastating bird flu outbreak and power cuts wanes, it said on Wednesday.

South Africa's largest poultry producer Astral Foods will bounce back to profitability in the half-year to March 31 as the impact of the country's devastating bird flu outbreak and power cuts wanes, it said on Wednesday. In a trading statement, Astral said it expects headline earnings per share (HEPS) - South Africa's main profit measure - to rise by at least 300% to 654 rand in the six months to March 31, up from 163 rand during the same period last year.

Astral posted a 621 million rand ($33 million) operating loss, the first in its 23 years of existence, in the year ended Sept. 30. This was mainly due to costs associated with the outbreak of a high-pathogenic avian influenza (HPAI), a bird flu which spreads rapidly in an infected flock causing a high death rate, as well as diesel costs to provide alternative power amid South Africa's ongoing electricity crisis.

Africa's most advanced economy is struggling to generate adequate electricity from its ageing coal-fired plants, which frequently break down. The company said while diesel expenses remained, the cost had reduced after the intensity of power cuts eased in the first quarter of the current financial year.

Feeding costs have also come down due to lower commodity prices, Astral said. It still faces water and electricity supply disruptions, while the importation of broiler hatching eggs to rebuild its chicken flock, decimated by bird flu, has added costs.

The company said it was "dismayed" by the International Trade Administration Commission of South Africa's decision to lift punitive tariffs on poultry imports, saying there was no shortage of chicken products to justify the move. South Africa's poultry producers say the move to allow more chicken imports into the country will hurt a sector battling to recover from the avian flu outbreak, an electricity crisis and higher input costs.

($1 = 18.8195 rand)