Oceana Group flags earnings dip in half-year results linked to low sales volumes

SOUTH AFRICA – Fishing giant Oceana Group, which owns Lucky Star and Daybrook Fisheries, expects its earnings to halve for the half-year.

The South Africa-based fishing firm said in a trading statement that a reasonable degree of certainty existed that group headline earnings per share (Heps), a measure of profitability that excludes one-off items, would be between 114.6c and 140.7c for the six months ended 31 March.

This represents a decrease of between 46% and 56% compared to HEPS of 260.5 cent reported for the comparative period.

Meanwhile the basic earnings per share (EPS), is expected to be between 105.1 cents and 133.5 cents representing a decrease of between 53% and 63% compared to EPS of 284.0 cents reported for the comparative period.

Profit for the period has been predominantly impacted by significantly lower levels of inventory carried into the period resulting from stock losses incurred during last year’s civil unrest in KZN.

The company has also experienced low horse mackerel and squid catches due to La Niña weather conditions.

The fishing group recently released its full year results for the period ended 30 September 2021 after a slight delay, reporting 8.1% decline in revenue to R7.633 billion (US$505m).

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This is attributed to lower canned fish, fishmeal and fish oil sales volumes, lower occupancy levels in the commercial cold storage segment, and a stronger exchange rate on export and US dollar translated revenue.

The decline in earnings was offset by favourable pricing across most products but higher fixed cost absorption from lower fresh fish landings impacted gross margins, which reduced to 33.7%

Its operating profit declined by 14.3% to R1.185 billion (US$78m) with Headline earnings decreasing by 11.2% to R652 million (US$43m) with headline earnings per share down by 12.5% from 628.4 cent per share to 550 cents per share.

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Looking at its canned fish and fishmeal business, it realised a 5% dip in sales in South Africa, partially offset by an 11% increase in the SADC and rest of Africa based on improved demand.

Meanwhile, fishmeal and fish oil unit in USA registered 36% drop in operating profit as result of lower catch rates and lower production volumes.

The decline in revenue and operating profit was exacerbated by an 11% strengthening of the rand.

Horse mackerel, hake, lobster and squid segment delivered 11% growth in operating profit, driven by strong demand for fresh fish.

Its Commercial Cold Storage and logistics (CCS) performed well as careful cost management and increased revenue per pallet offset supply chain disruptions and global container shortages.

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