Oceana’s investments deliver benefits but global fish oil market normalisation affects performance

Photo by Towfiqu barbhuiya on Unsplash

Steady consumer demand for Lucky Star and an improved performance from Wild Caught Seafood have however contributed positively.

In a trading update for the five months ended 23 February, the Group said a recovery in Peruvian production resulted in fishmeal, and particularly fish oil prices normalising from record highs. This impacted Oceana’s US and African fishmeal and fish oil operations.

Lucky Star Foods sales volumes increased by 5%. This was driven by continued consumer demand for affordable protein and the Group’s strategy to expand the brand and product range.

Margins improved following better-than-expected local pilchard landings, a consistent supply of imported frozen fish and the canneries operating more efficiently after upgrades carried out during the previous financial year. The cost of higher stock holding due to the timing of frozen fish procurement offset some of this margin improvement.

The factory upgrades also somewhat mitigated the impact of the price correction on the African fishmeal and fish oil operation. In addition to the efficiency gains, the upgrades delivered notable power and coal savings and resulted in quality improvements, throughput and yields.

The expanded production capacity of the West Coast plants will also allow Oceana to capitalise on improved landings of a robust red-eye herring biomass and the anticipated recovery of the anchovy biomass.

Daybrook, the US fishmeal and fish oil operation, only operated for a month in the period as the season was closed. Its performance declined from a record result in the previous financial year, mainly due to lower global fish oil prices and lower sales volumes.

Investment in the Wild Caught hake fleet saw improvements in days at sea and catch rates enabling the hake business to benefit from a 5% increase in total allowable catch.

After a mechanical failure last year, the Desert Diamond is back at sea and landing reasonable catches. Horse mackerel performance in Namibia was considerably lower but catch rates were better in the second quarter and pricing remains strong.

Oceana also announced it is unwinding the Stakeholder Empowerment Trust and will repurchase the Trust’s shares giving the value back to investors. Oceana’s Employee Empowerment Trust, known as the Oceana Saam Sonke Trust, will continue to operate in line with its original terms.