Lower volumes, volatile currency hit Oceana H1 earnings

The ongoing currency volatility could impact performance for the remainder of the year, group says.

South African fishing firm Oceana Group reported a drop both in its sales and earnings in the six months ended March 31 due lower sales volumes and a stronger South African Rand.

Profit after tax decreased 20 percent from ZAR 286.9 million (€19.4 million/$21.6 million) to ZAR 229 million (€15.5 million/$17.2 million) year-on-year.

Operating profit dropped 16 percent from the same period last year from ZAR 600.2 million (€40.5 million/$45.1 million) to ZAR 505 million (€34.1 million/$38 million).

Gross profit amounted to ZAR 1.22 billion (€82.3 million/$91.7 million) in the six months ended March 31, down 5 percent from the ZAR 1.28 billion (€86.4 million/$96.2 million).

Revenues declined 13 percent year-on-year from ZAR 3.6 billion (€242.9 million/$270.7 million) to ZAR 3.14 billion (€211.9 million/$236.1 million).

Oceana said the decline in turnover was "mainly due to lower canned fish volumes and the effect of a stronger Rand" and group operating profit was impacted by "adverse movement in net foreign exchange."

An interim dividend of ZAR 0.90 (€0.06/$0.07) per share has been declared, down from ZAR 1.12 (€0.08/$0.08) per share.

Oceana said currency volatility is "expected to persist in the medium term," which could impact its performance in the full year.

Challenges for canned fish

The group's canned fish division in Africa "experienced a challenging six months" with sales volumes decreasing by 28 percent.

Oceana's fishmeal and fish oil division delivered a solid performance despite headwinds from export earnings and fishmeal pricing, it said.

Overall sales volumes improved following positive landings in Angola and improved opening inventory in South Africa. This was partially offset by fishmeal and fish oil pricing, which "softened during the period, caused by increased global production following higher quotas in Europe and Peru and improved landings in Chile.

As a result, both revenue and operating profit for the division showed material improvement, Oceana said.

The initial 2017 South African total allowable catch (TAC) for pilchard decreased to 23,964 metric tons from 64,928 metric tons in 2016. The Namibian pilchard TAC was maintained at 14,000 metric tons.

Daybrook focusing on plant, vessels maintenance

The 2016 fishing season for the Menhaden fishery ended on Nov. 10, and consequently Oceana focused on annual maintenance of its Daybrook plants and vessels.

The 2017 season opened on April 17 and will run to the end of October.

Daybrook's sales volumes went to 31,507 metric tons, Oceana said, due to increased landings in the 2016 fishing season.

Horse mackerel quota cuts

The 2017 Namibian horse mackerel TAC increased by 1.5 percent to 340,000 metric tons. The Ministry of Fisheries and Marine Resources made an initial allocation of 140,000 metric tons for the 2017 fishing season with 34.8 percent allocated to existing rights holders.

The Desert Diamond fished in South African waters during the current period, having been deployed in Namibia during the first six months of the prior period.

Catch rates in Namibia are back in line with historical averages following lower catch rates experienced in the first quarter, with the size mix having decreased marginally, Oceana said.

In South Africa, the precautionary maximum catch limit (PMCL) for targeted catch of horse mackerel decreased by 28.4 percent to 27,684 tons.

Consequently, quota available to Oceana through own and joint venture allocations dropped to 24.8 percent from 34.7 percent of the PMCL.

Catches in South Africa improved materially over the period.

Overall, horse mackerel revenue was lower due to decreased sales volumes, offset by an improvement in US Dollar sales prices due to improved size mix.

The effect of improved pricing and procurement efficiencies served to improve overall trading margins for the horse mackerel business. As a result, operating profit was marginally lower than for the prior period, the group said.

Lower profit, revenue from hake business

The 2017 hake offshore TAC reduced by 4.7 percent to 117,194 metric tons.

Vessel utilization in this division was affected by the planned factory upgrade of the Mfv Beatrice, and the unforeseen breakdown of two vessels, which resulted in decreased sales volumes for the period.

Revenue and operating profit were consequently lower than the prior period, despite the positive effects of stronger European pricing which countered in part the effects of a stronger Rand.

Lobster and squid operating profit drops

The 2017 TAC for west coast lobster remained unchanged at 1,924 metric tons, although the offshore allocation dropped from 1,244 metric tons in 2016 to 1,204 metric tons.

Quota available to Oceana for the current season was 256 metric tons.

The industry continues to operate under an exemption with a delay in the announcement of the 2016 FRAP allocations.

Revenue and operating profit in the lobster business declined following the combined effect of lower landings resulting from a delay in the TAC announcement and permit allocations at the start of the 2017 season, lower catch rates, and the effect of a stronger Rand.

Fishing rights allocated to the squid business remained unchanged over the period.

Squid revenue and operating profit improved materially due to firm prices and increased landings compared to the prior period.


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