Oceana Group delivers solid operating performance despite headwinds

Oceana Group CEO Imraan Soomra: It was a satisfactory year, despite the tougher trading environment.

On Thursday, 14 November, Oceana Group announced a solid operating performance for the year ended 30 September 2019 across most of its business divisions. 

According to Oceana Group CEO and former CFO Imraan Soomra, who won the Transformation and Empowerment Award at the 2015 CFO Awards, it has been a “satisfactory year, despite the tougher economic trading environment”.

The financial highlights for the year were: 

  • Group revenue, at R7 647 million, remained stable
  • Headline earnings per share decreased by 25 percent, owing to a once-off deferred tax adjustment as a result of a reduction in the tax rate in the USA, which benefitted FY 2018 results. Excluding the tax effect, headline earnings increased by 4 percent.
  • Lucky Star delivered stellar sales volumes of 8 percent
  • Dividends of 363 cents (2018: 416 cents)
  • Group profit before tax increased by 2 percent

The statement said that detractors from the group’s overall solid performance were due to abnormal factors outside of its control, which impacted its fishmeal and fish oil business in Africa as well as in the USA. 

Imraan said that the fishmeal business had a challenging year. “The extended winter in South Africa saw the Fishmeal Africa operation experience a 13 percent reduction in landings, and further impairments occurred as a result of our exit from the Angolan business,” he said. 

The group’s fishmeal and fish oil business in the USA, Daybrook, experienced a decline in revenue by 4 percent to R1,721 million and a decrease in operating profit to R359 million. According to the statement, this was as a result of reduced landings and traded volumes, owing to the highest ever rainfall in the US Mid-west, which impacted fishing conditions, as well as a decline in Chinese demand for fishmeal, owing to the outbreak of African Swine Fever in this region. 

“These were extreme scenarios that impacted an otherwise strong operation with healthy margins,” Imraan said. 

He added that the group had made a significant capital investment in Daybrook during the closed season of approximately $6 million, which resulted in improvements in plant capacity and volume throughout. “This means that, going forward, we are ready to capitalise on peak fishing periods with the business well-positioned to deliver further growth,” he said. 

The group is also “constantly exploring opportunities to increase the participation of black people in this industry” and intends to engage further with the government in this regard. 

Imraan said that:

“While we anticipate continuing uncertainty in global and local markets, the underlying business fundamentals remain strong. The overall business is robust, resilient and well-managed, evident by this year’s performance. I am confident that the continued implementation of our diversification strategy will hedge against headwinds that may be brought on by a tough trading environment.”