Oceana Group, producer of the iconic Lucky Star brand in South Africa, said its Africa canned sales volumes increased 8% to 8.7 million cartons for the 11 months to August 27.
The sales were driven by continued demand for affordable and shelf-stable protein. Sales volumes in the past five months had reduced by 5% over the same period a year before, where volumes were boosted by a return to normalised supply levels.
However, the group warned that as far as its financial position was concerned, an increase in selling prices and reduction in freight costs were insufficient to offset above-inflation increases in energy, tin can and tomato paste costs, and the impact of the weaker rand against the US dollar on the cost of imported raw materials.
“Positively, local canning production volumes increased by 15% to 4.7 million cartons and 19% (August 2022: 11%) of raw fish volumes processed was landed locally.”
Higher inventory levels of four million cartons, compared to only 2.6 million cartons at the end of August 2022, were held to service expected strong demand going forward.
In the South African fish meal and fish oil business, strong fish oil pricing and the weaker rand against the US dollar resulted in a 32% increase in average rand selling prices for the 11-month period.
Sales volumes of 21 246 tons were 8% lower.
Production volumes were 24% lower due to adverse winter weather conditions impeding fishing.
The local canning and fishmeal and fish oil operations incurred R28 million in costs due to to load shedding.
In the US, landings of 568 million fish by Westbank for the 21-week season to date were 5% lower than the prior period.
Above average water temperatures in the Gulf of Mexico and low water levels in the Mississippi River adversely affected fishing in the past five weeks.
“The 28-week season ends on 31 October 2023, after the group’s 30 September 2023 financial year end. Fish oil yields, at 7.9%, are lower than the prior period’s 10.2% due to lower fat content in the fish landed.”
Improved opening inventories contributed to increased sales volumes for the 11 months, with fishmeal sales volumes increasing 49% to 44 892 tons and fish oil sales volumes increasing 27% to 12 567 tons.
Cancellation of Peru’s main anchovy fishing season due to the high presence of juveniles, resulting from the effect of El Niño, negatively affected Peruvian fishmeal and fish oil production levels in the period.
The lower supply from Peru and stable global demand resulted in US dollar fishmeal sales prices increasing by 9% and US dollar fish oil sales prices increasing by 38% compared to the prior 11-month period.
The effect of a 10% weaker rand and additional Hurricane Ida insurance proceeds of R72m (R63m) contributed to an improved year-to-date performance.
In the wild-caught seafood operations, horse mackerel sales volumes of 42 009 tons were in line with the prior 11-month period.
Hake sales volumes dropped by 38% to 6 842 tons due to fewer sea days and lower catch rates.
The freon conversion and production capacity upgrade of the Beatrice Marine hake fishing vessel, a contributing factor to the reduction in sea days, was successfully completed. High fuel prices impacted costs in both the horse mackerel and hake operations.
The disposal of the interest in the cold storage business on April 4 realised R370m after tax. The proceeds were used to settle R550m term debt in South Africa.
Term debt in the US was refinanced, which included the payment of an additional $15m from cash in excess of operating requirements.
Capital expenditure included R50m of a committed R115m, for construction of a canned meat facility, increasing the group’s investment and employment in the St Helena Bay region on the Western Cape West Coast.
BUSINESS REPORT