Astral CEO: How the weak rand could solve cheap chicken imports problem

Astral Foods, a leading South African poultry company, has recently announced that it will not be declaring an interim dividend due to the challenges posed by the COVID-19 pandemic on the poultry business. Despite an increase in first half revenue by 4%, profits were reported to be less than expected. The CEO of Astral Foods, Chris Schutte, joined CNBC Africa to discuss the impact of the lockdown on the company's operations. Schutte highlighted that Astral Foods, as an essential service, has continued to operate at full capacity throughout the lockdown period. However, the closure of restaurants and hotels, key clients for the company, has significantly affected demand for their products. With the unemployment rate expected to rise in the aftermath of the lockdown, Schutte expressed concerns about the potential impact on consumer spending and demand for poultry products. Additionally, the closure of quick service restaurants has led to an oversupply of chicken in the market, as competitors redirect their products to alternative channels. This influx of supply is likely to put pressure on pricing in the frozen chicken market in the medium term. Schutte also addressed the issue of imports, noting that imports accounted for 30% of poultry consumption in South Africa. Despite an increase in import tariffs, the impact on reducing imports has not been significant thus far. The fluctuation of the rand against major currencies may provide some relief by making imports more expensive in the coming months. Overall, Astral Foods remains cautiously optimistic about the future outlook but acknowledges the challenges that lie ahead in the poultry industry.