SOUTH AFRICA – Africa’s largest fishing company, Oceana Group, experienced a difficult first half with revenue declining by 11% to R3.179 billion (US$189m) and gross margin 3.7% lower at 30.2%.
This was largely due to lower inventory levels carried forward from last year as a result of Covid-19 supply chain disruption, the civil unrest in Kwa-Zulu Natal that impacted our SA canned fish sales volumes, and Hurricane Ida in Louisiana that impacted fishmeal and fish oil production at its US Daybrook operations.
Performance was further impacted by higher fuel and freight costs, lower landings due to La Niña weather conditions, scheduled vessel maintenance in Namibia, and lower cold storage occupancy levels due to the global supply chain impact on import activity.
Canned fish sales volumes declined by 10%, partially offset by a 7% price movement and reduced promotional spend.
Also, increased freight on imported pilchards and increases in other production costs were offset by a higher mix of landed fresh fish, while a significant increase in processed volume to 2.4 million cartons resulted in an improvement in operating margins.
Meanwhile, lower opening inventories of fishmeal and fish oil in its home market South Africa, reduced sales volumes by 47%, but this was partly offset by higher oil yields and significantly higher global price support for oils driven by improved demand from aquafeed producers in building inventories to mitigate against supply chain risks.
Its fishmeal and fish oil segment in US, witnessed reduced sales volumes by 33% in fishmeal and 15% in fish oil. This resulted in a 38% reduction (in US dollar-denominated) in operating profit.
Horse mackerel sales volumes were 15% lower, impacted by La Niña weather conditions in South African waters and scheduled vessel maintenance in Namibia, offset by strong demand-led pricing and a weaker rand. The decline led to a revenue decline of 7%.
On the other hand, Hake sales volumes increased by 8% but export pricing was constrained by lower value hake sizes, a high level of low value by-catch mix, and by the stronger rand.
European demand (and pricing) did however show signs of recovery towards the end of the period but was constrained by limited supply.
The company’s cold storage and logistics registered 9% reduced occupancy level due to increased global cost and availability of containers and the resulting lower level of import activity through Cape Town.
The group’s overall overhead expenditure was 7% higher, with R42 million (US$2.5m) of legal and incremental audit costs related to the delay in completing the September 2021 year-end audit.
Its headline earnings decreased by 50% to R153 million (US$9.10m) and headline earnings per share declined 51% to 126.4 cents per share.
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