Oceana shares have dropped nearly 20% so far this year and more than 23% over the past 12 months, as investors lose confidence in the fishing and food group behind household staple Lucky Star.
Despite owning one of SA’s most recognised food brands, the group has struggled to convince the market that its international strategy is delivering long-term value.
At the centre of the sell-off is Oceana’s underperforming US business, Daybrook Fisheries, that produces fishmeal and fish oil from Gulf menhaden, which continues to weigh on group earnings despite the resilience of its domestic operations.
Acquired in 2015 for more than R4bn, Daybrook was expected to provide hard currency earnings and reduce reliance on SA catch limits. But a decade later, it has become a source of concern.
The business is exposed to seasonal fishing, extreme weather on the Louisiana coast, and global commodity cycles. In 2025, Peru, the world’s largest fishmeal producer, ramped up supply, pushing prices lower and squeezing Daybrook’s margins, according to a report by the Financial Mail.
In its interim results to end-March, the company reported a steep drop in profit and a sharp decline in operating margins. Gross margin fell from 34.1% to 27.8%, while operating profit declined 33.5% to R676m. Headline earnings per share plummeted by 43.9%, and profit after tax by 43.7%.
While revenue rose slightly, helped by strong demand for Lucky Star and better hake catches, profitability was hit hard by lower prices in global fish oil markets and the weaker performance of the US operations. The group at the time flagged rising interest costs, higher debt and weaker cash generation, prompting a cut to the interim dividend.
Daybrook’s contribution to earnings has proved inconsistent over the years, fuelling renewed scrutiny of the acquisition. According to Financial Mail, Oceana’s market value has dropped below where it stood before the Daybrook deal. It has wiped more than R2bn of its value from R8bn to R6bn.
Domestically, Oceana’s core operations remain steady. Lucky Star, the group’s largest brand, continues to show resilience. It delivered strong revenue and profit growth in the interim period, driven by firm consumer demand and new product extensions. Yet the strength of the brand has not been enough to offset the drag from Daybrook.
While management has pointed to longer-term demand drivers in aquaculture and pet food as potential tailwinds for Daybrook, near-term market conditions are still proving to be difficult.
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