South African fishing giant Oceana Group saw earnings increase significantly in the six months running to March thanks to African operations, an uptick in cold storage occupancy levels and favorable currency conditions.
Despite the coronavirus, Oceana Group benefited from its largely in-home consumption product base, which balanced out foodservice losses. The company was also labeled as an "essential service," which allowed it to remain open and operating during the pandemic.
The group's operating profit jumped 9 percent year-on-year to ZAR 605 million (€32 million/$36 million) as demand for canned fish, mackerel and hake in Africa strengthened enough to offset reduced profits in Oceana's US operations.
"We have made enormous progress on increasing both operational and working capital efficiency," Oceana Group CEO Imraan Soomra said.
"More production is taking place in South Africa, especially with frozen fish, which has meant we have improved our man hours per carton produced and we also renegotiated dollar pricing for fish from abroad."
Revenues also increased 2 percent over the same period the year prior to ZAR 3.6 billion (€189 million/$214 million).
However, revenues from its Daybrook Fisheries US operations dipped 4 percent on lower fish oil sales due to weak catches in the year prior.
The company also optimized its South African fishmeal fleet and cold storage capacity. Joint venture losses were reduced significantly after closing its Angolan fishmeal operations.
Oceana Group held back from paying interim dividends to preserve cash in light of coronavirus uncertainties.
Soomra expects a negative impact on canned fish margins due to the Rand's depreciation, however the company plans to offset the pressure with supply chain improvements.
Despite no interruptions to production during the coronavirus, as South African infection rates increase, Oceana Group's operations may get impacted with the greatest risk to its midwater vessel operations, Soomra said.
“Coming out of this COVID-19 emergency is the need for greater collaboration between government and industry," Soomra said.
"In the fishing sector, there is now a deeper understanding of each other’s challenges, which can only be positive as we outline what policy should look like going forward."