Fishing company Oceana Group expects full year profit to increase by 18%

SOUTH AFRICA – One of Africa’s leading fishing companies, Oceana Group, expects its profits to rise as much as 18% for the year ending 30 September 2020, boosted in part by in-home consumption.

The producer of Lucky Star Pilchards indicated in a trading update that it expects headline earnings per share to rise between 13% and 18% from the prior year’s 544.3c.

The company’s principal market is the lower-end consumer, who purchase canned fish and horse mackerel.

The group said it had seen sustained demand for those types of goods during the pandemic, while companies including Pick n Pay and Rhodes Food Group also recently reported healthy demand for longer-life products.

In addition to that it was classified as an essential service provider in all countries in which it operated during peak of Covid-19.

Oceana Group is incorporated in South Africa, but has operations in Namibia and the United States.

Oceana Group’s half year operating profit increased by 9% to R605 million (US$35m).

In the six months ended 31 March 2020, the fishing company delivered a resilient operating performance reporting a 2% increase in revenue to R3.62b (US$210m) from R3.55b (US$205.95m) recorded during the same period last year.

The group attributed the rise in revenue to increased African operations’ revenue of 3% mainly attributable to improved canned fish, fish oil and horse mackerel pricing, increased cold storage occupancy levels and the favourable impact of the weaker Rand on export revenues.

Revenue from the companies USA operations, Daybrook, declined 4% due to lower fish oil sales volumes following lower prior year catches and oil yields, partially negated by firmer global fish oil pricing and the favourable US Dollar exchange rate.

According to the company’s interim unaudited results, group operating profit increased by 9% to R605 million (US$35m) compared to R554 million (US$32.1m) earned the previous year, driven by growth of 18% in African operations, offset by a reduction Daybrook’s operating profit which shrank by 23%.

Net interest expense increased by 7% from R130m (US$7.5m) recorded in March 2019 to R139 million (US$8m) in the current period. Its group profit before tax increased by 10% to R466 million (US$27m).

On a comparable basis, excluding the effects of the incremental dividends withholding tax, headline earnings increased by 4%.

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