Cape Town, South Africa-based Oceana Group is treading carefully as the cloud of COVID-19 continues to hang over the global fishing industry.
Despite a solid performance for the six months ending 31 March, 2020, the company has announced a deferment of its decision on an interim dividend “in light of the evolving impact of COVID-19 on the macro-economic environment and the group’s operations.”
“This precautionary measure preserves cash and provides greater balance sheet flexibility in these uncertain times,” the company said in a statement.
Oceana said it will finalize its interim dividend later in the year, depending on the outcome of an evaluation of the group’s performance and financial prospects for 2020.
However, the company reported a 2 percent increase in revenue to ZAR 3.6 billion (USD 215 million, EUR 190 million) and a 10 percent surge in profit before tax to ZAR 446 million (USD 26 million, EUR 23 million) for the business period ending 31 March, 2020.
During the same period, the cash generated from the company’s operations rose to ZAR 683 million (USD 40 million, EUR 35 million), up from ZAR 194 million (EUR 10 million USD 11 million) over the same period in 2019.
A sustained demand for canned fish, horse mackerel, and hake – coupled with improved pricing for fish oil and a weakened local currency – pushed up operating profits for the Africa operations by 19 percent. That uptick contributed to the growth of the growth of the group’s overall operating profit, which rose 9 percent to ZAR 605 million (USD 35 million, EUR 31 million), compared to ZAR 554 million (EUR 29 million, USD 32 million) in 2019.
However, Oceana reported a reduction in operating profits related to its U.S. operations after Daybrook – the company’s vertically integrated affiliate that catches and processes Gulf of Mexico menhaden into omega-3-rich fishmeal and fish oil products. Daybrook posted a 23 percent decline “due to lower fish oil sales volumes following lower prior year catches and oil yields, partially negated by firmer global fish oil pricing and the favorable U.S. dollar exchange rate.”
The Oceana Group management acknowledges the disposable incomes of consumers of some of its products “is under considerable pressure,” however this did not hinder an increase of the company’s canned pilchard volumes that rose to 4.5 million cartons from 4.4 million last year.
Oceana observes the continuing reliance on frozen fish imports for its canned fish production and links the trend to a “cyclical low” South Africa pilchard total allowable catch by the country's Department of Environment, Forestry, and Fisheries.
Meanwhile, Oceana Group said it is expecting the company’s operations in the Western Cape “to be negatively impacted by COVID-19 as the number of infections peak, with a higher risk of business interruption in our hake and horse mackerel segment.”
“Although the outcomes of COVID-19 on the macro environment and our operations remains unpredictable, at this stage, we believe that Oceana has sufficient headroom in terms of its debt covenants and liquidity requirements to cover adverse cashflow effects,” the company said.
The company hopes to ride on the advantage of having a geographically diverse customer base and a “wide footprint of our operations and the high levels of in-home consumption of our various product offerings” to mitigate the adverse impact of COVID-19 on its seafood business operations.
Photo courtesy of Oceana Group
