Oceana reports double digit growth in earnings driven by improved half year volume sales, high demand

SOUTH AFRICA – Africa’s largest fishing company, Oceana Group has reported a 12% rise in revenue from continuing operations to R8.148 billion (US$469m) in the year ended September 2022, while earnings from total operations including CCS Logistics, which was sold in October, increased by 11% to R8.438 billion (US$486.4m).

The double digit jump in top-line performance was also reflected on the company’s headline earnings, rising 13% to R736.1 million (US$42.43m), boosted by higher fishmeal and fish oil sales, positive pricing across most products and the benefit of a weaker exchange rate on export and US-dollar-translated revenue.

Also, favourable weather and fishing conditions in the US, improved landings by 55% to 704 million fish, with the prior year being hit by adverse conditions, notably Hurricane Ida.

However, overall sales volumes in US fell 10%, due to low opening inventory levels, but inventory levels closed 207% higher than the previous year, with Oceana saying it was better prepared for 2023.

The JSE-listed fishing Company also highlighted that a spike in consumer demand for more pocket-friendly protein supported the 17% increase in headline earnings per share (Heps) from continuing operations to 626 cents, up from 536.2 cents in 2021.

Oceana owns various tinned fish products such as canned pilchards and canned tuna, among others, selling them mainly under the Lucky Star brand.

“Consumer demand for affordable protein and the relative value that Lucky Star provides compared to competing proteins ensured a strong recovery in sales in the second half, after stock constraints hampered the first-half performance,” the group said.

Lucky Star gains consumer market share

Canned fish sales volumes in Africa in the second half increased by 8%, notwithstanding an effective 8% price increase, while total canned fish sales volumes for the year were down by 1% to 8.8 million cartons, impacted by stock availability in the first half.

“Fish, particularly canned fish, is an affordable, healthy source of protein for many South African families as the Kasi Brands survey confirmed when it found Lucky Star tinned fish to be the top township brand. The demand was always there, and the second-half sales volumes improved when we were able to replenish our stocks,” CEO Neville Brink said in a statement.

“This as well as global demand for fishmeal and fish oil and the Daybrook performance contributed to a set of results we’re very pleased with, particularly given the constrained global and local economies,” Brink added.

African fishmeal and fish oil sales volumes were up by 6% to 26 691 tons in the period under review, driven by an increase in anchovy landings, increased pilchard offal volumes resulting from higher local canning production, and an improved oil yield offset by low opening inventory levels.

Global feed ingredient shortages and lower Peruvian production output drove prices up by an average 30% in US dollar terms.

Inventory levels closed marginally higher than in the prior year due to unfavourable weather conditions impeding late-season landings.

The company’s Horse mackerel performance benefitted from continued strong demand for affordable protein, good prices and a weaker rand against the US dollar.

Sales volumes, however, declined 16% due to lower catch rates in both Namibia and South Africa, and scheduled vessel maintenance in Namibia.

In the hake business, poor vessel utilisation as a result of breakdowns, together with a R30 million increase in fuel costs, contributed to a decline in performance.

The 7% decrease in sales volumes was partially offset by a 4% improvement in European pricing.

Road to recovery

Oceana’s latest reporting on its financial performance seems to signal that the company is well on its way to redemption after battling various challenges in recent years.

In the last few years, the company has battled external investigations by financial authorities, with the Financial Sector Conduct Authority (FSCA) in February launching an investigation into the possible publishing of misstatements.

Oceana has also had to work through the precautionary suspension of its CFO Hajra Karrim and the resignation of CEO Imraan Soomra.

Its external auditor PwC also parted with the group, resigning due to what it called a lack of communication between it and Oceana.

Looking forward to the 2023 financial year, the group believes it is well placed to continue on its current growth trend in the first half of 2023.

“While cost pressures remain a concern, the business is generally in good shape and there is sustained and growing demand for our products,” Brink said.

“We know how reliant many consumers are on Lucky Star and will be driving efficiencies and cost improvements to maintain its relative affordability. We will also be looking to expand the brand into new canned food categories.”

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