Western Cape Business News

Send  Share  RSS  Twitter  14 Aug 2012

VENTURES: Astral Is Not On A Roll


Recent Western Cape Business News

POULTRY giant Astral Foods – one of the largest chicken producers in Southern Africa - has sold off its interest in a bakery joint venture scarcely a year after spending R70 million to open a bakery in Bellville.

As reported last year in CBN, Astral initially made this significant investment in the Western Cape after running into capacity constraints at its existing bakery facility up north in Pretoria.

Astral’s bakery interests are housed in a joint venture with East Balt, an Illinois-based company that manufactures hamburger buns, muffins, sandwich carriers and other rolls for the fast food and catering sectors.

A statement from Astral released in June disclosed the company had successfully concluded the sale of its 50% interest in East Balt South Africa to Fedoha Proprietary Limited for an amount of R96 million.

Astral said the decision to dispose of the interest was “made due to bakery activities being non-core to the activities of Astral Foods”.

Well, it seems Fedoha wanted the East Balt share pretty badly because Astral’s interest in the joint venture was reported as only R60 million in its recent interim results.

East Balt’s Bellville based plant – which also holds cold storage and warehousing facilities – boasted a capacity of
36 000 buns an hour.

While the official rationale for the disposal is set around baking being non-core, CBN did originally speculate that East Balt’s supply agreements with fast food giants, McDonald’s and KFC, could open doors for the core poultry business.

It was CBN’s understanding that at the time of opening the new Bellville-based bakery Astral was not supplying chicken to either outlet.

Astral Foods has sizeable poultry operations in the Western Cape under the well-known County Fair brand. In 2010 the operations were enlarged with the purchase of Paarl-based Vredebest Farms for R23 million.

Presumably the massive spin-offs CBN imagined if Astral could place a succulent chicken breast from County Fair on all those rolls supplied to McDonalds and KFC in the Western and Eastern Cape did not materialise.

Never count your chickens…we suppose.

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