Higher canned fish sales have lifted the performance of the global fishing group Oceana as it expects its headline earnings to increase at least one-fifth.
Canned fish sales volumes, which includes the Lucky Star brand, rose 33% year on year to 3.5-million cartons as higher inventory levels enabled the company, valued at R8.92bn on the JSE, to meet continued strong market demand, Oceana said in a voluntary trading update for the four months to January 29.
This comes, however, off the back of low stock levels in the same period last year, because of the civil unrest in 2021.
Rising chicken prices, the most widely consumed protein in SA, have made non-perishable food more attractive to cash-strapped consumers, who cannot store fresh foods in refrigerators because of power cuts.
But the improvement in the canned fish selling price over the period was insufficient to offset cost pressures, in part because of the weaker rand/US dollar exchange rate on the cost of imported frozen fish, resulting in lower operating margins in comparison to the prior period, the group said, as it hiked prices last month.
Looking ahead, it expects its basic headline earnings per share (Heps), the main profit measure in SA that excludes certain items, to increase more than 20% higher than the 126.4c reported the same time last year. It did not give a definitive basic Heps number, because of the uncertainty of fish catch rates for five weeks still left in the interim period, the volatility of the rand/dollar exchange rate, and the affect of the sale of its commercial cold storage business.
In terms of other products, SA fishmeal and fish oil sales volumes rose 23% to 3,065 tonnes.
“Performance of the horse mackerel operations improved with higher catch rates and increased fishing days in Namibia. SA catch rates remained poor, however, impacted by continued La Niña weather conditions in SA waters,” Oceana said. “Hake performance was impeded by lower catch rates, high fuel costs and fewer days at sea attributable to vessel maintenance,”
In the US, fishing will recommence in mid-April in 2023 when the season opens. Fishmeal sales volumes jumped 43% to 13,200 tonnes and fish oil sales volumes almost tripled to 4,100 tonnes in the world’s largest economy.
The group noted that it is relatively well protected against power outages, because its vessel operations rely totally on self-generated power and the primary power source for its fish meal operations on the West Coast relies on coal boilers. It also invested in backup generating capacity a few years ago, so remains largely unaffected by the problems at the state-owned power utility Eskom.
Oceana announced in October that it would sell its wholly-owned subsidiary Commercial Cold Storage (CCS Logistics) for R760m. It has received the regulatory approval for the sale from SA competition authorities and the department of forestry, fisheries & environment, but competition authorities in Namibia are still looking at the deal.
The date by which the regulatory conditions for the sale have to be met has been extended to April 30.
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