Oceana Group posts losses it attributes in part to COVID-19 and riots

Cape Town, South Africa-based seafood company Oceana Group has released a voluntary trade update for the 12 months ended September 30, 2021, showing losses for the full year – but a partial recovery in the second half of 2021.

The update comes after the company alerted its shareholders and clients of a potential delay in releasing its financial results for the 12 months ended September 30, 2021. The update has not yet been reviewed or reported by Oceana’s external auditors.

Oceana management has informed shareholders that an investigation by the company into transactions in its US operations – announced on October 29, 2021 – which forced a delay in the release of its financial results, is doing “good progress”. He said he would provide an update on the investigation’s findings no later than December 10, 2021.

“The investigation is not complete but progress to date does not indicate any material impact on results or financial statements,” Oceana said.

In its unaudited earnings report, Oceana said strong demand for the company’s main canned fish products and improved sourcing costs had boosted its performance in the second half of 2021, but demand was partially offset by supply chain issues related to COVID-19 and political riots. in the province of Kwazulu Natal.

The company reported a 2% drop in net sales “due to an overall 6% drop in sales volumes, in particular due to difficult business conditions in the first half of the year. “.

“This was mitigated by a recovery in volumes in the second half of the year, despite reduced inventory levels resulting from the Kwazulu Natal riots, and reinforced by a 5% price increase,” the company said.

Oceana’s purchases of frozen fish fell 32%, “due to obstacles to the global supply chain and the impact of COVID-19 on fisheries in West Africa at the start of the calendar year “.

Supply chain problems were partially offset by a 93 percent increase in fresh sardine catches. In addition, production efficiency and cost savings, coupled with a favorable exchange rate, contributed to “a 20% margin improvement”.

Elsewhere, despite good prices and demand for African fishmeal and fish oil in the Asian market, Oceana said “performance materials have been affected by declining industry landings.” .

“The increased production of animal feed in China for the aquaculture and pig farming sectors has contributed to the improvement of prices in the world market, leading to an average growth in meal prices of 9% fish in US dollars, ”Oceana said.

The opportunity for improved demand and prices was partially missed as Oceana reported a 40 percent drop in African anchovy and red-eye landings due to bycatch limitations and conditions meteorological.

In the United States, Oceana has reported a poor performance in its supply of fishmeal and fish oil due to overall declining opening stocks, challenges from COVID-19 and poor weather conditions. The challenges resulted in a 12% decline in volumes sold in its US operations compared to the prior period, despite healthy demand for the products and stable prices.

“The increase in aquaculture activity in Europe and China has had a positive effect on the price of fish oil,” Oceana said.

Oceana said it recorded average price growth of 2% and 5% for fishmeal and fish oil, respectively, in the North American market.

“Due to the significant drop in volumes, overall sales fell by 10% while margins in the United States [fishmeal and oil] activity decreased by 11% compared to the previous period, ”said Oceana.

The company recorded strong performances in its horse mackerel, hake, lobster and squid segment “supported by good demand for fresh fish products in key geographies”.

“The operational performance of horse mackerel has been exceptional, driven by strong demand in traditional African markets coupled with general protein supply shortages which have contributed to very favorable prices,” Oceana said.

Overall revenue growth of 9% in the segment was supported by stable supply, but partially offset by a stronger SAR / USD exchange rate, resulting in overall margin improvement of 23%.

“This has been a difficult time for our hake business, with operating performance negatively affected by low water days for the period, mainly due to unscheduled maintenance and extensive COVID-19 protocols, resulting in a reduction in 8% of landings, ”Oceana said. .

The drop in consumption on the European market put short-term pressure on the hake business, negatively impacting revenues “although prices were brought back to normalized levels during the latter part of the year”.

“The overall revenue decline of 6 percent contributed to a 25 percent drop in margin for the hake business,” Oceana said.

The company’s lobster and squid business “performed strongly supported by improving lobster prices and good squid landings,” according to the update. Segment revenues increased by 14% and margins by 6% over the 12 month period.

Photo courtesy of Big Red Design Agency / Shutterstock

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