Astral’s shares plunge on cost of water issues in Standerton
Shares in Astral Foods opened 10.7% lower on Tuesday — the biggest fall in more than 18 years — after the poultry-producer said water-supply issues at its Standerton facility had already cost it at least R85m.
The company said earlier in May the deterioration of municipal infrastructure in the Lekwa (Standerton) municipality had led to water-supply interruptions at its plant there. This was “despite the proximity of this municipality to a substantial water source in the Vaal River”.
Astral said on Tuesday the problem had worsened despite a permanent order of court requiring the municipality to provide a minimum supply of water.
To date, this would dent profits by at least R85m. The costs were partly related to forced production cuts.
Astral, led by CEO Chris Schutte, said the local municipality had not been cooperating.
“Astral is actively seeking alternative water supply solutions in an attempt to mitigate any further cost impacts under the ongoing water supply interruptions,” it said.
“All possible avenues are being explored which includes continued legal action to secure water supply through the municipal infrastructure.”
Astral’s shares opened 10.7% down at R153.01 on Tuesday — more than any full-day drop since at least April 2001, according to Bloomberg data.