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Fishing company Oceana Group [JSE:OCE] reported a solid financial performance for the six months ended March 2018, with material volume improvements and continued efficiencies in Africa.
Headline earnings for the period increased by 60% compared to the prior period. The company declared an interim dividend of 112.0 cents per share.
Imraan Soomra, interim CEO of the group, is pleased with the results, particularly after a challenging year in 2017.
“Our performance during this six months was underpinned by a recovery of our African operations. Materially higher canned fish volumes, improved SA horse mackerel landings, better hake vessel utilisation and improved exchange rates for our frozen fish procurement were positives during the period," said Soomra.
"These tailwinds were adversely impacted by pricing in our US operations, a stronger rand on export revenues and reduced fish landings in Angola."
Group revenue increased by 11% to R3 489 million, driven by an 18% improvement in revenue from its African operations.
Operating profit from African operations increased by 51%, driven by lower raw material and logistics costs, and improved vessel utilisation and catch rates in the hake and horse mackerel segment.
Performance
The canned fish division grew its profit during the period, with sales volumes increasing by 23% due to an improved pricing strategy which stimulated consumer demand. The company said its strategy of importing frozen raw material for local processing in order to supplement lower landings in South Africa and the suspension of fishing in Namibia had paid dividends.
In the fishmeal division Anchovy landings in South Africa were consistent with prior periods, however performance has been affected by lower landings and production yields in Angola. Fishmeal and fish oil pricing remained firm in USD terms but were offset by the stronger rand.
In the US, Daybrook’s 2018 season opened on 16 April 2018 and will run to the end of October 2018. Revenue was down on the prior period by 8% in dollar terms mainly due to the fact that a large portion of fishmeal and fish oil sales are concluded in advance and were impacted by the lag effect of lower prices contracted during the latter part of 2017.
In Namibia horse mackerel landings improved due to higher catch rates and better vessel utilisation. The higher catch rates together with the positive effect of the stronger rand on USD denominated costs reduced landed fish costs.
In South Africa, the reduction in horse mackerel quota available to Oceana was more than offset by the 55% improvement in catch rates. Sales prices increased due to firm demand for the larger sized South African fish.
Revenue for the hake segment grew by 30% due to stronger European pricing, a stronger euro exchange rate and improved volumes resulting from enhanced vessel utilisation.
Revenue and operating profit in the lobster and squid businesses increased following the combined effect of higher landings, a higher mix of live lobster sales and firmer pricing.
CCS coastal stores delivered an improved performance primarily in the Western Cape region with new customer volumes and increased volumes of frozen fish imports. Tough trading conditions in the Gauteng region continued.
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