Canned fish, catch rates go swimmingly for Oceana interim performance

Oceana believes it has delivered a solid performance in the last six months, with improvements in revenue and operating profit. It announced its interim unaudited results for the six months ended March 30, 2019, this week.

Group operating profit increased by 16% to R554m, underpinned by a strong performance from the canned fish business, and improved pricing realised by its export businesses.

Group revenue increased by 3% to R3.557bn, and the dividend declared was up 10% at R1.23 per share. In a sluggish South African market, Lucky Star achieved an 11% volume growth, attributed to its affordability strategy and focused promotional and marketing efforts.

This was further bolstered by strong supply chain efficiencies and improved catch rates in the hake and horse mackerel sectors, but partly offset by lower export volumes due to reduced sea days brought about by planned vessel maintenance in the period.

In the US, Daybrook's revenue in rand terms increased by 7% primarily due to firmer fishmeal and oil pricing and a weaker SA currency.

As a result of strong operating performance and the positive impact of lower loan term debt, group profit before tax increased by 28%.

Headline earnings per share, however, reduced by 19%, primarily due to the non-recurrence of a US deferred tax release in the prior period resulting from a reduction in the US federal corporate tax rate. Excluding this effect, headline earnings per share increased by 17%.

Oceana group CEO Imraan Soomra said in a statement that the company had kept its focus on both the top and bottom line, namely driving sales in a strategically diversified portfolio while consistently improving our efficiencies.

Profitability in the Africa fishmeal business improved, with higher sales volumes and realised prices in South Africa. Lower losses were recorded in Angola following suspension of operations over growing concerns about the long-term sustainability of the sardinella resource.

The commercial cold storage business continued to show improvement, Oceana said, with positive indicators including increased occupancy levels, storage rates and pallets handled, while performance at coastal facilities benefited from increased procurement of frozen fish for the canned fish business. Performance for the six months was negatively impacted by Gauteng inefficiencies.

"Looking ahead, we are confident about the prospects for Lucky Star, although we expect a tougher trading environment and the impact of a weaker rand on imported fish," said Soomra.

"We expect firmer global fishmeal and fish oil prices. Early season landings in both SA and the US are positive, and the weaker rand will have a positive impact on our export businesses."

In addition, Soomra expects the second half will be underpinned by improved vessel utilisation in the horse mackerel and hake businesses.

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