Interim Results Presentation - astralfoods.com · Interim Results Presentation for the 6 months...

Interim Results Presentation

for the 6 months ended 31 March 2019

2

“

”

AGENDA

Business Overview Page 3 / Slide 3

Operational Overview Page 5 / Slide 8

Financial Overview Page 12 / Slide 21

Industry Trends Page 17 / Slide 32

Outlook Page 21 / Slide 40

Additional Information Page 23 / Slide 44

BUSINESS OVERVIEW

SALIENT POINTS

Business

Overview

Operational

Overview

Financial

Overview Industry Trends Outlook

4

Feed input costs increased markedly on higher maize prices due

to unfavourable weather conditions in the planting season, which will

negatively impact crop yields for 2019

Poultry selling prices decreased for the period under review

leading to an under recovery on higher input costs

Poultry production efficiencies were maintained in line with

projections

Extraordinary cost increases in the newly legislated national

minimum wage, costs associated with load shedding, and the strike

cost in KZN negatively impacted profits

Fresh product processing capacity expansion, with the project

underway at the Festive plant located in Olifantsfontein and on track

for commissioning in April 2020

Revenue

Profit before interest and tax

Earnings per share @ 948 cps

Headline earnings per share @ 949 cps

Interim dividend of 475 cps

52%

52%

51%

3%

KEY FINANCIAL INDICATORS

5

53%

Business

Overview

Operational

Overview

Financial


6

DIVISIONAL SALIENT POINTS

Poultry

Feeding cost increased

Bird performance maintained

Broiler sales volumes down

Broiler sales realisations down

Extraordinary cost impacts

Feed

Raw material costs up

Lower internal feed required

External sales volumes down

Expenses well controlled

Improved Rand per ton margin

Other Africa

Lower profits – depressed performances from Mozambique and Zambia

6

Business

Overview

Operational

Overview

Financial


1 036

503

113

176

145

114

0

200

400

600

800

1 000

1 200P

BIT

1H

20

18

Ra

w m

ate

rial

co

st

Fe

ed

co

nve

rsio

ne

ffic

ien

cy

Bro

iler

sale

sv

olu

mes

Bro

iler

sell

ing

pri

ce

s

Extr

ao

rdin

ary

exp

en

ses

Oth

er

PB

IT 1

H20

19

THE PERIOD IN PERSPECTIVE

7

R533 million

(R million)

Business

Overview

Operational

Overview

Financial


17 2

“

”

8

FEED DIVISION

Operating profit - R million

Operating profit up 24.6%

• Net margin 7.2% 1H2018: 6.2%

• Expenses well controlled

• Rand per ton margins up

Revenue - R million

Revenue up 6.7%

• Raw material costs up

• Average selling prices up 7.6%

• Sales volumes down 0.9%

3 097 3 303

-

1 000

2 000

3 000

4 000

1H2018 1H2019

191

239

-

50

100

150

200

250

1H2018 1H2019

9

Business

Overview

Operational

Overview

Financial


FEED DIVISION

Business

Overview

Operational

Overview

Financial


SAFEX yellow maize prices increased markedly for the period under

review 1H2019 avg. R2 579 per ton (1H2018: R1 981) up R598 per ton y-o-y

Internal feed sales decreased marginally by 0.6% due to improved broiler

feed conversion rates

External feed sales decreased by 1.3% as livestock sectors came under

pressure from higher feed costs and producers moved for lower feed prices

Expense increases well controlled across the division for the period under

review

The average net margin increased (on a Rand per ton basis) for the period

under review

10

FEED DIVISION – SALES MIX

59%

7%

21%

13%

59%

5%

21%

15%

1H2018

703 827 Tons

1H2019

697 569 Tons Volume decrease ≈ 0.9%

11

Business

Overview

Operational

Overview

Financial


“

”

12

13

POULTRY DIVISION


Operating profit down 68.9%

• Broiler feed price up 9.2%

• Net margin 4.7% 1H2018: 15.4%

Revenue - R million

Total revenue up 1.0%

• Broiler sales volumes down 1.1%

• Broiler sales realisations down 3.4%

• Breeder revenue up R100 million

5 415 5 472

-

1 000

2 000

3 000

4 000

5 000

6 000

1H2018 1H2019

828

258

-

100

200

300

400

500

600

700

800

900

1H2018 1H2019

Business

Overview

Operational

Overview

Financial


14

POULTRY DIVISION - COMMERCIAL

Profits for the six months ended March 2019 reflect a significant decline on

the comparable period

Broiler live cost increased due to rising feed costs resulting in a higher base

cost of production

Broiler selling prices decreased on subdued consumer demand and

deeper promotional activity in the market, leading to an under recovery of

higher input costs

Broiler sales volumes down despite sales realisations decreasing on the

comparable period

Overhead expenses increased with the newly legislated minimum wage,

exacerbated by the impact of load shedding nationally, and water supply

interruptions in Standerton

Imports during the period were lower than the comparable period,

averaging 41 771 tons per month (1H2018: 46 850 tons)

Business

Overview

Operational

Overview

Financial


15

POULTRY DIVISION – PRODUCT MIX

51%

2%

3%

14%

7%

23%

1H2018

230 710 Tons

51%

2% 4%

13%

8%

22%

1H2019

228 172 Tons Volume decrease ≈ 1.1%

Business

Overview

Operational

Overview

Financial


16

POULTRY DIVISION - AGRICULTURE

Breeder revenue increased on higher demand for parent stock and an

increase in broiler day-old chick sales

Feed input costs increased due to higher raw material costs adversely

affecting the live bird production cost

Strike action in KZN at National Chicks and Mountain Valley impacted

profitability during the period under review

Further improvements in on-farm poultry production efficiencies,

benefitting broiler live cost through an improved feed conversion rate

Higher broiler hatching egg production as a result of Astral’s bird flu

contingency planning

In South Africa 203 cases of highly pathogenic bird flu have officially

been reported across 9 provinces, from the 21st of June 2017 to the 28th of

February 2019

Business

Overview

Operational

Overview

Financial


17

BROILER PRODUCTION PERFORMANCE

94%

96%

98%

100%

102%

104%

106%

108%

F2014 F2015 F2016 F2017 F2018 1H2019

Slaughter age Live weight Average daily gain

Key indicators base-lined to 100% in F2014

Business

Overview

Operational

Overview

Financial


BROILER PRODUCTION PERFORMANCE

18

60%

65%

70%

75%

80%

85%

90%

95%

100%

105%

110%

115%

120%

125%

130%

F2014 F2015 F2016 F2017 F2018 1H2019

Mortality Feed consumption Performance efficiency factor

Key indicators base-lined to 100% in F2014

Business

Overview

Operational

Overview

Financial


“

”

19

OTHER AFRICA DIVISION (Zambia, Mozambique & Swaziland)

20


Operating profit down 59.9%

• Net margin 3.0% 1H2018: 9.1%

• Mozambique provision for

non-recovery of import VAT

Revenue - R million

Revenue up 20.9%

• Sales volumes up 11.7%

• Average selling prices up 8.2%

185

223

-

50

100

150

200

250

1H2018 1H2019

17

7

-

5

10

15

20

1H2018 1H2019

Business

Overview

Operational

Overview

Financial


FINANCIAL OVERVIEW

INCOME STATEMENT

22

Six months ended 31 March

2019

R million

2018

R million

Restated

Revenue 6 775 6 600

Operating profit 503 1 036

Operating profit margin 7.4% 15.7%

Net finance income 18 22

Profit before tax 521 1 058

Tax (151) (297)

Profit for the period 370 761

Headline earnings 368 759

EPS – Cents 948 1 958

HEPS – Cents 949 1 959

3%

51%

51%

52%

52%

52%

% change

51%

Business

Overview

Operational

Overview

Financial


4 700 4 902

5 755 5 511

5 823

6 131

5 795

6 556 6 600 6 379

6 775

213 280

550 551

429

120

212

866

1 036

906

503

1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19

External revenue Operating profit Operating profit margin %

15.7%

3.7%

13.2%

GROUP SIX MONTHLY REVENUE AND PROFITABILITY

23

(R million)

14.2%

7.4%

2.0%

7.4%

10.0% 9.6%

5.7%

4.5%

Business

Overview

Operational

Overview

Financial


2 550

2 956 2 961

3 275 3 461

3 729 3 448 3 405

3 096 3 102 3 303

1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19

Revenue Change in volumes Change in feed price

FEED SIX MONTHLY REVENUE

24

(R million)

Business

Overview

Operational

Overview

Financial


3 317 3 650

4 503 4 237

4 436 4 693

4 456

5 394 5 415 5 188

5 472

1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19

Revenue Change in broiler selling price Change in volumes

POULTRY SIX MONTHLY REVENUE

25

(R million)

Business

Overview

Operational

Overview

Financial


45 59

351 310 194

-135 22

608

828

625

258 157 197

186 237

233

252 184

207

191

266

239 213 280

550 551

429

120 212

867

1 036

906

503

-0,1

0,1

0,3

0,5

0,7

0,9

1,1

1,3

1,5

1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19

Poultry Feed Other Africa Change in feed price Change in broiler selling price

GROUP SIX MONTHLY OPERATING PROFIT

26

(R million)

Business

Overview

Operational

Overview

Financial


March 2019

R million

September 2018

R million

% change

Non-current assets 2 507 2 409

Net working capital 1 419 1 189

Current assets (excl. cash) 3 053 2 943

Current liabilities (excl. borrowings) (1 634) (1 754)

Non-current liabilities (excl. borrowings) (656) (650)

Net assets 3 270 2 948

Net (surplus cash) (431) (789)

Equity 3 701 3 737

Total 3 270 2 948

BALANCE SHEET

27

19%

4%

7%

1%

11%

11%

1%

4%

45%

Business

Overview

Operational

Overview

Financial


CAPITAL EXPENDITURE

28

Six months ended 31 March 2019

R million

2018

R million

Depreciation 88 78

Total capex spend 345 136

Festive expansion 223

Standerton silo complex 30

Other capex 92

Outstanding commitments 753 144

Festive expansion 651

Standerton silo complex 22

Other capex 80

Total spend and committed 1 098 280

Board approved (on hold) 344

Mountain Valley expansion 203

Zambian feed mill 141

Business

Overview

Operational

Overview

Financial


WORKING CAPITAL

29

March 2019

R million

September 2018

R million

Variance

R million

Current assets 2 863 2 912 (49)

Biological assets 779 770 9

Inventory - Poultry 415 532 (117)

- Feed 285 255 30

- Other Africa 36 50 (14)

Trade receivables 1 214 1 204 10

Other receivables 134 101 33

Current liabilities (1 634) (1 754) 120

1 229 1 158 71

Capital expenditure advance payments 190 31 159

Net working capital 1 419 1 189 230

Business

Overview

Operational

Overview

Financial


STATEMENT OF CASH FLOWS

30

For the six months ended 31 March 2019

R million

2018

R million

Cash operating profit 407 1 094*

Working capital movement 100 (42)*

507 1 052

Tax paid (131) (259)

Net interest received 21 25

Capital expenditure (345) (136)

52 682

Dividends paid (409) (339)

Other cash flow items (1) 2

Proceeds on investment sold – prior year - (4)

Movement in cash equivalents (358) 385

Effect of exchange rate changes - (4)

Opening balance 789 553

Closing balance 431 934

Business

Overview

Operational

Overview

Financial


*Restated

Decline in poultry profitability - profit margin at 4.7% (1H2018: 15.4%)

Feed profitability in line with expectations

Capital expenditure on expansion projects – R253 million paid

Net surplus cash at 31 March 2019 of R431 million

Interim dividend of 475 cps at 2 times cover

IN SUMMARY

31

Business

Overview

Operational

Overview

Financial


INDUSTRY TRENDS

SAFEX YELLOW MAIZE PRICE

33

Source: CJA Strategic Risk Brokers

Business

Overview

Operational

Overview

Financial


SAFEX YELLOW MAIZE PRICE vs. CBOT IN RAND TERMS

34

Business

Overview

Operational

Overview

Financial



DURBAN SOYA MEAL PRICE

35


Business

Overview

Operational

Overview

Financial


POULTRY IMPORTS PER MONTH

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

55000

60000

65000

70000

Oc

t-1

4

De

c-1

4

Feb

-15

Ap

r-1

5

Ju

n-1

5

Au

g-1

5

Oc

t-1

5

De

c-1

5

Feb

-16

Ap

r-1

6

Ju

n-1

6

Au

g-1

6

Oc

t-1

6

De

c-1

6

Feb

-17

Ap

r-1

7

Ju

n-1

7

Au

g-1

7

Oc

t-1

7

De

c-1

7

Feb

-18

Ap

r-1

8

Ju

n-1

8

Au

g-1

8

Oc

t-1

8

De

c-1

8

Feb

-19

36

Tons

Source: SAPA

Business

Overview

Operational

Overview

Financial


BROILER SELLING PRICE

37

Source: Own Data

80%

85%

90%

95%

100%

105%

110%

115%

120%

125%

130%

135%

140%

145%

Oct-

14

Dec-1

4

Fe

b-1

5

Ap

r-15

Ju

n-1

5

Au

g-1

5

Oct-

15

Dec-1

5

Fe

b-1

6

Ap

r-16

Ju

n-1

6

Au

g-1

6

Oct-

16

Dec-1

6

Fe

b-1

7

Ap

r-17

Ju

n-1

7

Au

g-1

7

Oct-

17

Dec-1

7

Fe

b-1

8

Ap

r-18

Ju

n-1

8

Au

g-1

8

Oct-

18

Dec-1

8

Fe

b-1

9

Broiler selling price index Six month average

Business

Overview

Operational

Overview

Financial


BROILER PRICE vs. FOOD PRICE INFLATION

38

Source: Own Data

90%

100%

110%

120%

130%

140%

150%

90%

100%

110%

120%

130%

140%

150%

Oct-

14

Dec-1

4

Fe

b-1

5

Ap

r-15

Ju

n-1

5

Au

g-1

5

Oct-

15

Dec-1

5

Fe

b-1

6

Ap

r-16

Ju

n-1

6

Au

g-1

6

Oct-

16

Dec-1

6

Fe

b-1

7

Ap

r-17

Ju

n-1

7

Au

g-1

7

Oct-

17

Dec-1

7

Fe

b-1

8

Ap

r-18

Ju

n-1

8

Au

g-1

8

Oct-

18

Dec-1

8

Fe

b-1

9

Broiler selling price index SA food price index

Business

Overview

Operational

Overview

Financial


-30%

-20%

-10%

0%

10%

20%

30%

40%

Oc

t-1

4

De

c-1

4

Feb

-15

Ap

r-1

5

Ju

n-1

5

Au

g-1

5

Oc

t-1

5

De

c-1

5

Feb

-16

Ap

r-1

6

Ju

n-1

6

Au

g-1

6

Oc

t-1

6

De

c-1

6

Feb

-17

Ap

r-1

7

Ju

n-1

7

Au

g-1

7

Oc

t-1

7

De

c-1

7

Feb

-18

Ap

r-1

8

Ju

n-1

8

Au

g-1

8

Oc

t-1

8

De

c-1

8

Feb

-19

% Change in broiler feed price % Change in broiler selling price

CHANGE IN BROILER SELLING PRICE vs. FEED PRICE

39

Source: Own Data

Business

Overview

Operational

Overview

Financial


OUTLOOK

Raw material price increases will negatively impact Astral’s largest

input cost, namely feed which makes up 66% of broiler live cost

Traditionally slower trading conditions for the second half of Astral’s

financial year, exacerbated by continued high levels of unemployment

The negative impact of high fuel prices on consumer disposable

income, leading to continued pressure on poultry selling prices

Higher local poultry production levels together with imports from

Brazil and the USA, will negatively impact the supply and demand

balance in the short term

The newly legislated minimum wage will continue to impact poultry

production costs

Municipal infrastructure deterioration in Standerton, leading to water

supply interruptions at a cost to the business

41

Business

Overview

Operational

Overview

Financial


POTENTIAL NEGATIVE INFLUENCES

Sufficient international coarse grain stocks with good prevailing

planting conditions in the US and South America

Maize imports into the Western Cape at a discount to local Safex

prices, will contribute positively to feed input costs in that region

Local maize stocks together with maize imports will meet demand,

despite early season SA maize crop concerns

Recent late rainfall received in the maize growing areas of the country,

will benefit soil moisture conditions for the new planting season

Supply and distribution of the Ross poultry genetics in South Africa,

has been secured for a further ten year period with the conclusion of a

renewed supply agreement with Aviagen

42

POTENTIAL POSITIVE INFLUENCES

Business

Overview

Operational

Overview

Financial


“

”

43

ADDITIONAL INFORMATION

12,30%

14,81%

19,82%

25,00%

27,80%

26,22%

27,83%

23,76%

21,17%

10%

15%

20%

25%

30%

0

25

50

75

100

125

150

175

200

225

250

275

300

325

350

375

2012 2013 2014 2015 2016 2017 2018 2019E 2020F

End Stock Maize stock to use ratio

WORLD CORN ENDING STOCKS

45

Million Tons


SOUTH AFRICA – TOTAL MAIZE SUPPLY & DEMAND

46

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19E 2019/20F

Actual Actual Actual Actual Estimate Estimate Forecast

Carry In (1 May) 1 414 589 2 074 2 471 1 093 3 689 2 940

Crop Estimate 11 811 14 250 9 955 7 779 16 820 12 510 10 655

Retentions 433 163 309 1 191 495 481

Sagis Delivery 11 072 13 817 9 794 7 469 15 629 12 015 10 174

Minus early deliveries 0 0 0 450 0 0 0

Imports 80 65 1 964 2 237 0 206 700

Total Supply 12 566 14 471 13 831 11 727 16 722 15 911 13 814

Domestic Usage Food 4 583 4 840 4 698 4 808 4 993 5 146 5 220

Domestic Usage Feed 4 715 5 041 5 520 5 004 5 276 5 355 5 100

Gristing, withdrawn & released 480 376 293 278 313 249 540

Total Domestic Usage 9 777 10 257 10 512 10 090 10 583 10 750 10 860

Exports & Sundries 2 122 2 153 848 993 2 451 2 221 1 002

Plus early deliveries 0 0 0 450 0 0 0

Carry Out (30 Apr) 590 2 062 2 471 1 093 3 689 2 940 1 952

No of days usage 25 73 86 40 127 100 66

STU 4,96% 16,62% 21,75% 9,87% 28.31% 22.67% 16.46%

Marketing year (May to April)

'000 tons


1 414 590 2 062 2 471 1 093 3 689 2 940 1 952

12,23%

4,96%

16,62%

21,75%

9,87%

28,31%

22,67%

16,46%

0%

5%

10%

15%

20%

25%

30%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19E 2019/20F

Carry out Maize stock to use ratio

SOUTH AFRICA – TOTAL MAIZE SUPPLY & DEMAND

47

‘000 Tons


EL NIÑO SOUTHERN OSCILLATION - FORECAST

48 Source: International Research Institute for Climate and Society (IRI) – Columbia University

SOUTHERN AFRICA - VEGETATIVE HEALTH INDEX

49

VHI of previous year VHI of current year

Source: NOAA - National Environmental Satellite, Data, and Information Service (VHI)

BROILER FEED – INGREDIENT INCLUSION & COST CONTRIBUTION

50

Source: Own Data

65,0

45,7

63,3

43,6

61,4

39,6

61,1

38,0

55,6

29,8

54,3

26,7

53,4

28,6

11,4

14,9

15,6

20,3

16,8

22,3

14,0

18,6

14,0

17,9

13,2

17,9

13,8

18,4

9,1

8,6

6,4

5,6

6,9

5,4

6,2

4,0

6,1

3,3

5,7

4,1

4,9

4,2

6,4

14,9

6,7

14,0

7,3

17,2

7,8

18,8

8,6

21,5

9,1

21,3

8,6

20,1

0,2

0,9

0,4

1,2

0,5

1,7 0,4

1,5 0,5

1,7

0,7

2,3

0,7

2,2

7,5

10,3

7,3

10,3

6,6

9,1

9,9

13,8

14,6

19,8

16,6

22,2

18,2

23,4

0,3

4,7

0,3 5,0

0,4

4,7

0,5

5,4

0,5

6,0

0,4

5,4

0,4 3,0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1H16Incl.

1H16Contr.

2H16Incl.

2H16Contr.

1H17Incl.

1H17Contr.

2H17Incl.

2H17Contr.

1H18Incl.

1H18Contr.

2H18Incl.

2H18Contr.

1H19Incl.

1H19Contr.

Maize Soybean MealSunflower Meal OtherFish Meal F/Fat and Extr SoyVitamins, Minerals and Medication.

BRAZIL, EU & USA PRODUCT COST BENCHMARK

51

Ex BRAZIL – May 2019

FROZEN LEG QUARTERS BULK PACKED

CIF DBN US$ per ton TON 1 200.00 1 200.00 1 200.00 SA COST

R/$ exchange rate R$ 14.30 14.60 14.90

Rand per ton TON 17 160.00 17 520.00 17 880.00 23 480.00

Rand per kg KG 17.16 17.52 17.88 23.48

Duty per kg KG 37% 37% 37% -

Clearance costs KG 0.65 0.65 0.65 -

COST INTO STORAGE KG 24.16 24.65 25.15 23.48

Storage KG 0.50 0.50 0.50 -

Distribution KG 0.80 0.80 0.80 0.92

Marketing, Administration, Finance KG 0.80 0.80 0.80 0.96

TOTAL COST KG 26.26 26.75 27.25 25.36

EUROPE – May 2019


CIF DBN € per ton TON SA COST

€ exchange rate R$

Rand per ton TON 23 480.00

Rand per kg KG 23.48

Duty per kg KG -

Clearance costs KG -

COST INTO STORAGE KG 23.48

Storage KG -

Distribution KG 0.92

Marketing, Administration, Finance KG 0.96

TOTAL COST KG 25.36

Source: Own Estimates

BRAZIL, EU & USA PRODUCT COST BENCHMARK

52

EUROPE Ex Ireland, Spain, Poland and Denmark with Safeguard Duty @ 30 % – May 2019


CIF DBN € per ton TON 1 100.00 1 100.00 1 100.00 SA COST

R/€ exchange rate R$ 16.00 16.20 16.50

Rand per ton TON 17 600.00 17 820.00 18 150.00 23 480.00

Rand per kg KG 17.60 17.82 18.15 23.48

Duty per kg KG 30% 30% 30% -



Storage KG 0.50 0.50 0.50 -



TOTAL COST KG 25.63 25.92 26.35 25.36

Ex USA – May 2019


CIF DBN US$ per ton TON 1000.00 1000.00 1000.00 SA COST

R/$ exchange rate R$ 14.30 14.60 14.90

Rand per ton TON 14 300.00 14 600.00 14 900.00 23 480.00

Rand per kg KG 14.30 14.60 14.90 23.48

Duty per kg KG 37.00% 37.00% 37.00% -



Storage KG 0.50 0.50 0.50 -



TOTAL COST KG 22.34 22.75 23.16 25.36


LOCAL BROILER PRODUCTION & MARKET SHARE

53

Local broiler production ≈ 19.4 million birds per week

26%

20%

8% 7%

8%

5%

4%

22%

Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other


LOCAL BROILER PRODUCTION & MARKET SHARE

54

Avg. poultry imports ≈ 7.4 million birds per week

(6 months ending March 2019)

18%

13%

6%

5%

6% 3%

2%

16%

31%

Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Imports

Source: SAPA & Own Estimates

TOTAL POULTRY IMPORTS (CHICKEN, MDM, TURKEY)

55

F2018 46 348 45 875 48 600 47 242 40 230 52 807 46 651 47 085 37 800 48 816 61 751 56 456

F2019 45 061 44 571 37 739 35 174 42 094 45 987

% Var -2,8 -2,8 -22,3 -25,6 4,6 -12,9

bpw* 8,0 7,9 6,7 6,2 7,5 8,2

*bpw ≈ million birds per week

Tons

Source: SAPA

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

F2016 37 789 83 258 126 866 165 602 200 461 258 134 306 385 360 899 414 947 460 098 502 138 551 209

F2017 50 324 101 279 135 812 173 187 212 399 278 057 319 933 367 106 409 557 453 981 499 952 551 867

F2018 46 348 92 223 140 823 188 065 228 295 281 102 327 753 374 838 412 638 461 454 523 205 579 661

F2019 45 061 89 632 127 371 162 545 204 639 250 626

0

100 000

200 000

300 000

400 000

500 000

600 000

F2016 F2017 F2018 F2019

TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN

56

Brazil 61,5%

EU 12,6%

Argentina 5,9%

US 16,1%

Other 3,9%

Country of origin for poultry imports - 2018

Brazil 52,1%

EU 23,0%

Argentina 2,7%

US 18,0%

Other 4,2%

Country of origin for poultry imports - March 2019 YTD

566 210 tons 123 275 tons

Source: SAPA

TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN

57 Source: SAPA

Country Imports (tons)

2017 2018 2019 YTD

Brazil 337 476 348 155 64 212

United States 87 059 91 374 22 153

Argentina 32 816 33 278 3 363

Ireland 24 746 26 328 7 052

Denmark 16 884 25 672 5 794

Poland 72 13 463 11 993

Thailand 4 019 9 011 2 867

Canada 14 431 7 305 1 576

Spain 11 138 4 932 3 298

Chile 1 770 4 362 614

Australia 984 553 114

Swaziland 24 482 23

Uruguay 50 359 -

Netherlands 112 323 48

United Kingdom 1 366 231 76

Germany 134 222 37

Belgium 23 451 23 27

Other 344 137 28

Grand Total 556 877 566 210 123 275

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

Jan

-14

Ma

r-14

Ma

y-1

4

Ju

l-14

Sep

-14

No

v-1

4

Jan

-15

Ma

r-15

Ma

y-1

5

Ju

l-15

Sep

-15

No

v-1

5

Jan

-16

Ma

r-16

Ma

y-1

6

Ju

l-16

Sep

-16

No

v-1

6

Jan

-17

Ma

r-17

Ma

y-1

7

Ju

l-17

Sep

-17

No

v-1

7

Jan

-18

Ma

r-18

Ma

y-1

8

Ju

l-18

Sep

-18

No

v-1

8

Jan

-19

Ma

r-19

SOUTH AFRICAN PROTEIN PRICE COMPARISON

58 Source: SAPA, FNB, Red Meat Industry Forum

Chicken Pork Beef Mutton

Feed Conversion Rate 1.5 2.2 5.5 5.0

Per Capita Consumption 39,5 kg 5,1 kg 17,0 kg 3,0 kg

cents / kg

INDUSTRY MATTERS

POULTRY IMPORTS

60

The EPA (SADC-EU Economic Partnership Agreement) safeguard for poultry bone-

in imports from the EU is in force

Under the provision the safeguard duty on EU frozen bone-in portions will be as

follows (to which the EU have declared a dispute):

35.3% from 28 September 2018 up to and including 11 March 2019

30% from 12 March 2019 up to and including 11 March 2020



This duty levels the playing field somewhat, with imports from Brazil and the US

subject to a 37% import duty (current) for these exporting countries (plus an anti-

dumping duty on the US - for which the AGOA 65 000 ton annual quota is exempt)

Imports from the EU over the past couple of years have been substantially lower

than historical levels, from a time where record EU imports were received in

November 2016. This is due to the prevalence of highly pathogenic bird flu in a

number of EU countries affecting EU trade with South Africa

Import volumes previously supplied by the EU have switched to Brazil, which is

currently the largest exporter of poultry products to South Africa

POULTRY IMPORTS

61

Tariff Investigation (Frozen Chicken)

SAPA has made application made for an increase in the rate of custom duties for

bone-in portions and boneless cuts from 37% and 12% respectively to the

maximum bound rate of 82%

ITAC has already found unfair trade within WTO rules and only the percentages

are up for review

The ITAC investigation was expected to be completed by the end of March

2019 with the Minister of Trade and Industry making his decision 2 to 4 weeks

thereafter

However, this has been delayed by an urgent application from AMIE and

Merlog Foods where they are claiming:

Access to certain confidential information from SAPA and the Participating

Producers ("Confidentiality Claim"); and

A right to receive a preliminary decision from ITAC for comment prior to making a

recommendation to the Minister of Trade and Industry ("Constitutional Claim")

Anti-Dumping Application against Brazil

Webber Wentzel provided an opinion that there is sufficient evidence to prove

dumping of bone-in portions into South Africa

It is necessary to update the 2017 injury information provided for the frozen

chicken tariff investigation / application to include 2018

It is has been recommended that ITAC be engaged informally to obtain its view on

whether there is sufficient information to initiate an application

WAGENINGEN UNIVERSITY RESEARCH

62

South Africa remains an efficient chicken producer in the global

context, and has consistently produced chicken cheaper than European

Union countries

This is according to the latest research from the Bureau for Food and

Agricultural Policy

Data for major chicken producing countries is analysed every two

years by Wageningen University and Research in the Netherlands,

which has been ranked as one of the world’s top agricultural universities

Additional research to include the comparable South African data has been

undertaken by the Bureau for Food and Agricultural Policy (BFAP), an

independent research institute in Pretoria

The report, based on data from 2017 was released during April 2019 by

the BFAP

South African producers remain competitive and were shown to produce

a kilogram of chicken meat at a lower cost relative to the European

producers included in the sample, but at a higher cost than the leading

exporters such as the US and Brazil (with the difference mainly being

attributable to feed costs)


63

TECHNICAL EFFICIENCY


64

ECONOMIC EFFICIENCY: TOTAL PRODUCTION COSTS

Chris Schutte

Chief Executive Officer

Tel : +27 (0) 12 667 5468

Fax : +27 (0) 86 504 2002

email: [email protected]

www.astralfoods.com

Daan Ferreira

Chief Financial Officer

Tel : +27 (0) 12 667 5468

Fax : +27 (0) 86 504 1602

email: [email protected]

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