Cape Town, South-Africa based Oceana Group posted a 13.2 percent increase in revenue for the five months ending on 25 February 2024, the company said in a voluntary trading update.
The company said record prices for fish oil and fishmeal during the period benefited its subsidiary, Daybrook, which was the main driver behind the higher revenue. The subsidiary was carrying higher opening inventory levels from the end of the October 2023 fishing season, which led to an “exceptional” performance and a doubling of the company’s revenue.
“Revenue further benefited from the positive effect of the weaker rand exchange rate on export and U.S. dollar translated revenue,” Oceana Group said.
Elsewhere, Oceana Group’s canned fish revenue from its African branch dropped by 8.7 percent compared to the same period the year prior. The company partially attributed this drop to high sales volumes in the prior period related to a scheduled January 2023 price increase, which led customers to increase purchasing prior to the increase.
The African branch's fishmeal and fish oil revenue also dropped, falling 36.3 percent over the period due to lower opening inventory levels and lower sales volumes that came with it. The company added that it had lower volumes of pilchard offcuts from its canneries, which was linked to longer factory closures.
“The decision to close both West Coast plants earlier than normal to implement the planned factory upgrades resulted in lower production volumes for the period, which impacted fixed cost recovery and operating margin,” Oceana Group said.
Oceana Group said the factory upgrades are progressing as planned and are expected to be completed by mid-April.
Oceana Group recorded an 18.4 percent drop in revenue for its wild-caught segment in the period. Its South African horse mackerel performance had lower volumes due to “persistently low catch rates.” Adding to the low catch rates was a major breakdown of the company’s fishing vessel Desert Diamond, which took an extended time to repair due to a lack of replacement parts. Oceana's squid catch rates were also down, largely due to poor fishing conditions, the company said. Its Namibian horse mackerel fishery, however, recorded solid catch rates and improved U.S. dollar pricing. Oceana Group’s hake fishing also did well, with higher sales and better prices compared to the previous period, but it said catch rates across the industry are still behind historical averages.
Looking forward, Oceana Group said subdued demand will continue to put pressure on the company’s canned fish sales as protein consumption shifts. Its fishmeal and fish oil segments will largely depend on the success of the Peruvian anchovy fishery, Oceana Group said. Peru canceled its main anchovy fishing season in 2023, heavily impacting global suppliers of fishmeal and fish oil due to its status as one of the largest fisheries by volume in the world. That closure benefited the company in the prior fiscal year ending 30 September 2023, which drove the company’s revenue to its highest level in years.
“Global fishmeal and fish oil markets will monitor the fishing and production output of Peru's first anchovy season, which runs April to June, and this could slow demand and the willingness of customers to commit to longer-term contracts until Peru's performance is known,” the company said.
Oceana Group said that it is on track with its three-year capital investment plan to upgrade its facilities and vessels and that the Desert Diamond will return to service in the second half of 2024.
The company plans to release its full results for the six months ending 31 March 2024 on 10 June 2024.
