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Home » Industry News » Food, Dairy Processing & Manufacturing » Oceana delivers strong four-month performance

Oceana delivers strong four-month performance

Positive trading update driven by strong local demand for canned fish, good pricing and international demand for fishmeal and fish oil

HEPS and EPS expected to be up by over 20%

Continued strong demand for affordable, healthy protein and improved inventory levels over the last four months have enabled Oceana to build on a strong second- half performance last year.

In a voluntary trading update, for the four months ended 29 January 2023, the Group reported, canned fish sales volumes during the period were up 33% to 3,5 million cartons (January 22: 2,6 million cartons).

“This time last year a lack of stock affected our performance as we sought to recover from supply chain disruptions and the 2020 unrest, but we were always confident that demand was there. These numbers and market research such as the Kasi Brands survey, which found Lucky Star to be the top township brand, bear this out,” says Oceana CEO Neville Brink.

He says Oceana recognises the importance of canned fish to many South African families, primarily because of the value it offers compared to other protein and also because it doesn’t spoil as a result of more frequent and higher levels of loadshedding.

“It’s why we’re expanding our range of canned products and do everything possible to keep these affordable, from offering the small 155g cans of pilchards to not putting ring-pulls on the product, which would increase the price. Unfortunately cost pressures, particularly the impact of the rand/ dollar exchange rate on the cost imported frozen fish necessitated a moderate price increase towards the end of January this year.”

The Group also reported better early season anchovy landings than during the prior period and its South African fishmeal and fish oil sales were 23% higher at 3 065 tons (January 2022: 2 495 tons).

Although it is the off-season in the United States, with fishing due to recommence in mid-April, improved opening inventory levels saw US fishmeal sales volumes grow 43% to 13 200 tons (January 2022: 9 200 tons) and fish-oil sales volumes increase to 4 100 tons (January 2022: 1 400 tons).

Stronger Chinese demand and lower anchovy landings and oil yields in Peru have continued to drive dollar pricing, resulting in an average 11% increase in fishmeal dollar sales prices and a 61% increase in fish oil dollar sales prices compared to the same period last year.

The weaker exchange rate also benefitted performance, when dollar earnings were converted into rand, as did the receipt of a $4,3 million (R72 million) payment following the finalisation of a 2020 Hurricane Ida insurance claim.

Horse mackerel operations’ performance improved due to higher catch rates and increased fishing days in Namibia. La Niña weather conditions resulted in poor South African catches, although strong demand-led pricing and the weaker rand aided performance. Hake performance was impeded by lower catch rates, high fuel costs and vessel maintenance. Overall horse mackerel and hake sales volumes increased by 43% to 19 700 tons (January 2022: 13 800 tons).

The Group has weathered increases in the frequency and severity of loadshedding well as its vessel operations rely on self-generated power and the boilers at its canning and fish meal-operations are not reliant on Eskom power. Some time ago it invested in back-up generating capacity, so loadshedding does not affect the canning and fishmeal operations.

The sale of the Group’s Commercial Cold Storage business has received regulatory approval from the South African competition authorities and the Department of Forestry, Fisheries and the Environment. As the Namibian competition authority has not yet approved the transaction, the parties have agreed to extend the date for fulfilment from 28 February 2023 to 30 April 2023.

Oceana confirmed to shareholders that it is reasonably certain that the Group’s basic headline earnings per share and basic earnings per share for the interim period ending 31 March 2023 will be 20% higher than the HEPS  of 126.4 cents and EPS of 119.9 cents for the previous period.

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