Oceana defers its dividend
Oceana Group, which produces canned pilchards under the Lucky Star label, has deferred its dividend decision owing to uncertainty about Covid-19 despite it not having been hurt by the pandemic so far.
Oceana Group, which produces canned pilchards under the Lucky Star label, has deferred its dividend decision owing to uncertainty about Covid-19 despite it not having been hurt by the pandemic so far.
The group, which paid out about R144m in dividends in the prior matching period, warned that Covid-19 may yet have unforeseen effects in some of its operations.
Taxed profit rose 4% to R312m, with Oceana reporting improved canned fish sales in an environment in which SA consumers were feeling pressure on their disposable income.
Canned pilchard demand remained resilient into April and May, the group said, but it was seeking to hold on to cash, even though the effect on the group had so far been limited.
Oceana CEO Imraan Soomra said most of the fish sold in SA was sold for in-home consumption, meaning the group was protected from closures in the hospitality and tourism sectors.
“Not only are we well positioned across geographies, but our customers are located right across the world, with fresh fish being in demand in Africa and Europe, pet food in the US, fish meal in Europe, Africa and Asia, and canned fish in SA,” said Soomra.
The group’s canned fish and fishmeal segment in Africa had operating profit growth of 19% The group said a canned fish sales price increase in November, together with the lower cost of local production, offset the effect of rand weakness on imported frozen fish. The group imported fish because the total allowable catch for pilchards is at a cyclical low.
The group’s debt rose slightly to about R3.6bn, partly due to the rand weakening. More than half of the debt is dollar-denominated. This compares with market capitalisation of R8.1bn.
The weak rand remained a double-edged sword for Oceana, benefiting exports but putting pressure on pilchard imports and its dollar-denominated debt, said Small Talk Daily’s Anthony Clark. “Oceana has a strong, cash-generative balance sheet and I cannot see any need to raise any capital. Rather, continued debt refinancing in a record low interest rate environment will benefit the company more,” said Clark.
Oceana said: “The board will continue to evaluate the group’s operational performance and financial prospects during the year before concluding on an interim dividend.”
Oceana’s share price jumped 7.33% to close at R65.45.