Oceana navigates Namibia’s fish squeeze

Oceana reported higher operating profit for the 11 months to 31 August despite severe declines in production and sales volumes in its African fishmeal and fish-oil business.

The Johannesburg Stock Exchange-listed fishing and food group said group revenue was broadly in line with the previous period, while improved performances from Lucky Star Foods, its US fishmeal and fish-oil operation and wild-caught seafood supported operating profit.

The update comes as Namibia works to revive its pilchard industry after years of low stocks. The government recently offered 5 000 tonnes of pilchard quota at auction, with 3 500 tonnes ultimately allocated.

Oceana's trading update, however, covers the period ending 31 August, before that auction took place.

The group's African fishmeal and fish-oil operation recorded the sharpest deterioration during the period. Production fell by 73% and sales volumes by 72%, driven by lower industrial fish landings and reduced pilchard trimmings from lower cannery production.

The decline came despite a 31% increase in average fishmeal and fish-oil prices in Rand terms.

Oceana said the lower production base resulted in a material increase in production costs per unit and the segment's operating loss increased from the level reported at the interim results.

Lucky Star hit by fish shortages

Oceana's Lucky Star Foods business also faced shortages of frozen fish raw material, constraining canned pilchard availability and slowing sales.

Total sales volumes declined by 5%, with canned-fish volumes falling 9%. The company said limited inventory prevented the business from fully meeting demand.

Local canning production volumes fell by 60%, increasing production costs per unit as fixed costs were spread over lower volumes.

Higher net realised selling prices, lower freight and inventory holding costs, a better sales mix and increased volumes of locally caught pilchards helped offset some of the pressure on margins.

The company said inventory volumes ended the period significantly below the previous period, mainly because of constrained fish supply.

Oceana expects to release its full-year results for the year ending 30 September on or around 26 November.

The company said the financial information and forward-looking statements in the trading update had not been reviewed or reported on by its auditors.