Oceana Group reports millions in profit
Due to Covid-19 disruptions, the Group estimate lost revenue of R73 million and a corresponding operating profit reduction of R34 million.
04 June 2021 | Business
Lucky Star is expected to continue to attract consumers given its relative affordability and will seek to maintain its popularity as a protein of choice for consumers. Imraan Soomra, CEO: Oceana Group
Oceana Group, Africa’s largest fishing company, reported profit before tax up by 5%, headline earnings per share up 4%, and earnings per share up 13% at the interim stage.
The Group maintained its growth trajectory in a tough business environment, delivering further earnings growth after a strong performance last year.
According to Group Chief Executive Officer (CEO), Imraan Soomra, the demand has remained strong right across its product spectrum, and although Covid-19 had disrupted its supply chain of canned fish in the latter half of the six months, the company’s close management of inventory and working capital had delivered results.
“We de-geared our balance sheet, cutting debt in South Africa by 6% and our US debt in dollars by 5%. This together with a more favourable interest rate in South Africa helped bring our net interest expense down significantly by 32% to R94 million,” he said.
While product demand was strong across the board, this was particularly the case with fresh fish. The company recorded good landings and strong demand for horse mackerel, while hake was affected by Covid-related disruptions to fishing days.
“Canned fish demand remained positive and we grew market share off a high base in the previous period. As consumers turned increasingly to staples, Lucky Star benefited from its positioning as an affordable protein,” Soomra added.
Reduced profit, Outlook
“All in all, we estimate lost revenue due to Covid-19 related disruptions at R73 million and a corresponding operating profit reduction of some R34 million,” he pointed out.
As expected, group revenue for the period was weighed down by the performance of the fishmeal and fish oil segment in the US on the back of the significantly lower prior season catch, with Daybrook’s stock levels 36% down on last year.
However, fishmeal offtake volumes performed better than expected with continued demand from US pet food manufacturers, while overall pricing for both fishmeal and fish oil increased.
The US 2021 fishing season started on 19 April and will run until the end of October. Early season indicators are positive.
Looking ahead, Soomra said that while economic conditions are still uncertain, the outlook for Oceana included strong demand for its products, and strong pricing for fish meal and fish oil. The prospects for recovery in hake were good, and steady landings were anticipated for fish meal and oil, hake and horse mackerel, he said.