Oceana Group’s canned fish sales volumes increased by 33% in the four months to January 29 to meet strong demand for one of the country’s most affordable source of protein.
The group said in a trading statement yesterday the strong sales volume growth to 3.5 million cartons followed low stock levels in the prior year’s first quarter, that had been caused by supply chain disruptions and the effects of the 2021 civil unrest.
The share price increased 2.34% to R70 by yesterday afternoon, 22.6% higher than the R54.15 a year it traded at a year before.
However, an improvement in canned fish selling price was insufficient to offset cost pressures, in particular the impact of the weaker rand/dollar exchange rate on the cost of imported frozen fish, resulting in lower operating margins in comparison to the prior period.
This had necessitated a further sales price increase to be implemented towards the end of January 2023, the group said.
The fishing products group said it expected basic headline earnings per share (Heps) and basic earnings per share (EPS) for the six months to March 31, 2023 to be more than 20% higher than the reported Heps of 126.4 cents and EPS of 119.9 cents for the previously reported interim period.
The group said the main reasons for the increase in earnings were higher opening inventory levels, strong local demand for canned fish and firm international pricing for fishmeal and fish oil.
Uncertainty about fishing catch rates, rand/dollar exchange rate uncertainty, and the accounting impact for the disposal of the Cold Storage business meant the group could not provide more definitive guidance.
It said early season anchovy landings have been better than the prior period and South African fish meal and fish oil sales volumes were 23% higher at 3 065 tons.
In the US, it was the off season and fishing would resume in mid-April. US fish meal sales volumes increased by 43% to 13 200 tons and fish oil sales volumes increased to 4 100 tons (January 2022: 1 400 tons) due to improved opening inventory levels.
Stronger Chinese demand together with lower anchovy landings and oil yields in Peru continued to drive dollar pricing, resulting in an average 11% increase in fish meal dollar sales prices and a 61% increase in fish oil dollar sales prices compared to the prior period.
Horse mackerel operations improved with higher catch rates and increased fishing days in Namibia. South African catch rates remained poor however, impacted by continued La Nina weather conditions in South African waters. Strong demand-led pricing and the weaker rand/dollar exchange rate contributed positively to the performance.
Hake performance was impeded by lower catch rates, high fuel costs and fewer days at sea attributable to vessel maintenance.
Horse mackerel and hake sales volumes increased by 43% to 19 700 tons.
Commercial Cold Storage (CCS Logistics), which was being sold, saw a strong recovery in occupancy rates in Gauteng and Western Cape.
The group remained relatively well protected against the increased incidences of load shedding in South Africa given that its vessel operations rely on self-generated power and its canning and fish meal operations on the Cape West Coast rely on coal boilers for power. There was also back-up generating capacity.
Anthony Clark, an independent analyst at Smalltalkdaily Research (@smalltalkdaily) tweeted, “Solid & very positive H1 trading update guidance (4-months) from $JSEOCE Oceana saying bumper period ahead. I'd expect further upgrade given recent rand collapse lower oil prices + price increases Lucky Star.”
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