Oceana Group delivers stellar performance but remains wary of further COVID-19 outbreaks

SOUTH AFRICA – One of Africa’s leading fishing companies, Oceana Group has delivered an exceptional performance for the year ended 30 September 2020, with profit after tax growing by 26%, amidst challenging economic conditions, logistics and supply constraints compounded by Covid-19 restrictions and protocols.

The group and its operations were classified as an essential service provider in all geographies in which it operated during the peak Covid-19 lockdown periods.

To this end it was accordingly able to continue operating with all employees abiding by stringent procedures and protocols to safeguard their health and well-being.

Its revenue increased by 9% to R8.308 billion (US$546m) from R7.647 billion (US$502m) of the previous year, while operating profit went up by 21% to R1.4 billion (US$92m).

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This contributed to growth in headline earnings by 15% from R636 million (US$41.8m) to R734 million (US$48.2m).

The increase in earnings was driven by increased fishmeal sales volumes, consistent supply and sustained demand for canned fish together with favourable pricing across most products which was further enhanced by the benefit of a weaker exchange rate on export revenue.

“Diversification of both supply of raw materials and demand for our products has been key to delivering strong results this year.”

Oceana Group CEO – Imraan Soomra

The group operates in South Africa, Namibia and the United States of America and markets fish-based products in 46 countries across the world, managing a fleet of 54 vessels and eight cold storage facilities.

“Our customers are located across the world, with fresh fish being in demand in Africa and Europe, pet food in the US, fishmeal in Europe, Africa and Asia, and canned fish in South Africa.

“Diversification of both supply of raw materials and demand for our products has been key to delivering strong results this year,” said Group CEO, Imraan Soomra.

Strong trading

According to Oceana, during the period it continued to focus on ensuring affordability and accessibility of Lucky Star, Oceana’s iconic canned fish product.

This in turn yielded a resilient performance by growing core volumes driven by strong in-home consumption and improved feeding scheme volumes.

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In addition, canneries in SA and Namibia delivered production and supply chain efficiencies to offset the significant increase in the cost of imported raw material, which ensured further cost containment to assist consumer affordability.

Strong demand for fresh fish protein, particularly in Sub-Saharan Africa, contributed to similar growth in the group’s mackerel, hake and cold storage operations, with these segments delivering operating profit growth of 20%.

The performance of group’s fishmeal segment improved materially, driven by firm pricing particularly in the US pet food sector and good catch rates in both geographies.

According to Soomra US households increased their number of pets, which saw more demand for pet food, a product the group supplies. Oceana generates 25%-30% of its earnings from the US. 

During the period under review, Oceana introduced proactive measures to strengthen the balance sheet and optimise cash flow during the year, resulting in a significantly strengthened balance sheet and reduced debt levels.

Its cash balances improved significantly to R1 212 million while US debt remains ringfenced and serviced by strong US cashflows. Net debt to EBITDA improved to 1.4 times from 2.2 times last year.

Weary of second wave COVID-19 outbreak

Looking ahead, the group expects a growing demand for its products in the medium term. It will look to earnings growth in canned fish by keeping it affordable and consistently supplied.

With fishmeal and fish oil, the group anticipates increased consumption in aquaculture, farming and the US pet food sector, and improved volumes in US fishmeal from investments in catch and processing capacity which is expected to yield results from the commencement of the new fishing season.

“While in-home consumption, strong inventory management and our affordability strategy will position us well for the next year, we are mindful that a second wave of the Covid-19 outbreak, particularly a prolonged one that potentially extends into the second half of 2021, may disrupt fish supply and availability.

“We continue to monitor global trends and refine our operational tactics accordingly,” concluded Soomra.

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