Oceana takes a knock in profits and share price

THE SHARE price of South Africa’s largest fishing company, Oceana Group, plunged nearly 14 percent on Friday after it reported that its profits in the year to September had plunged nearly 50 percent.

The shares on the JSE later in the day recovered to close 6.10 percent down at R80.

Oceana reported a 49.98 percent decline in profits for the year to R479.35 million, down from R958.29m as compared to a year ago, primarily impacted by a stronger rand; lower global fishmeal prices and a slowdown in South African consumer spend.

However, the company was confident that recovery was on the way and was banking on a stronger performance in the period ahead.

The owner of Lucky Star canned pilchards said last week it was not on the lookout for new acquisitions, but would consider smaller acquisitions.

Chief executive Francois Kuttel said the company was concentrating on its US acquisition Daybrook Fisheries.

“We want to ensure that we don’t take too much debt so soon after we acquired Daybrook. We are not on the lookout for acquisitions in the short term, but if something attractive and smaller comes up, we might reconsider,” he said.

Oceana acquired Daybrook for $382m (R5.33 billion) in May 2015.

Increase Daybrook production reported an increase in fishmeal production to 55 406 tons, up from 50 994 tons, but a decline in fish oil to 17 737 tons, down from 27 545 tons as compared to last year. However, the group was confident of better production in the year ahead.

“There are signs of a recovery in both fishmeal and fish oil pricing, with global demand being stimulated by lower prices and improved demand in Asia,” it said.

In the African operations, the group said it also expected the canned fish business to improve in the year ahead after taking a knock in the last financial period.

Kuttel said the canned fish business experienced declining sales volumes in the first half of the year, reflecting both the nature of the trading environment and the timing effect of price increases in October last year.

Improve “We definitely expect it to improve in the next financial period as we have seen rising demand in countries like China. The volumes started improving in the second half of the reporting period reflecting a strong demand in the last quarter of the 2017 calendar year,” Kuttel said.

Export volumes were recorded at 7.9 million cartons of canned fish sold, a decline of 15.96 percent as compared to the prior year’s volumes of 9.4 million cartons.

Oceana trades in different products, which included canned fish and fishmeal, horse mackerel and hake, lobster and squid.

One of its big brands, Lucky Star canned pilchards, is a market leader in its category and accounts for 3 million meals a day in South Africa. Lucky Star pilchards was affected by the South African Total Allowable Catch (TAC) and was decreased to 45 560 tons, down from 64 928 tons last year.

“Pilchard was the most affected by the quota. It meant hat we had to import the shortfall from countries like Morocco and Japan,” he said. The Namibian pilchard TAC for 2017 was maintained at 14 000 tons.