Fishing group Oceana says it got a lift as consumers eyed its Lucky Star brand as a relatively cheaper form of protein, with robust demand helping lift revenue by double digits in its year to end-September.
Revenue rose 11% to R8.48 billion, with headline earnings rising 13% to R736.1 million, also boosted by favourable weather and fishing conditions in the US, which helped with landings. The group's total dividend fell 3% to 346c per share, with it also warning margins are under pressure from surging input costs.
Consumer demand for affordable protein and the relative value that Lucky Star provides, compared to competing proteins, ensured a strong recovery in sales in the second half, after stock constraints hampered the first-half performance, the group said.
Sales volumes in the second half increased by 8%, notwithstanding an effective 8% price increase. Total canned fish sales volumes for the year were down by 1% to 8.8 million cartons, due to the first half pressure. Cost pressures, particularly freight and tin-can costs as well as a weaker rand, made it more expensive to import frozen fish, and contributed to reduced margins.
Favourable fishing and weather conditions in the US resulted in Westbank increasing its landings by 55% to 704 million fish, with the prior year being hit by adverse conditions, notably Hurricane Ida. Sales volumes fell 10%, due to low opening inventory levels, but inventory levels closed 207% higher than the previous year, with Oceana saying it was better prepared for 2023.
On average, fishmeal prices improved by 8% and fish oil prices by 49%, in dollar terms, given global supply and demand dynamics. Rising US inflation, however, together with higher fuel and gas prices, put pressure on operating costs, the group said.
Demand for low-cost protein is expected to continue to drive sales volumes of canned fish despite the constrained consumer environment. Cost pressures, most notably the effect of the weaker exchange rate on imported raw materials, will put pressure on canned fish margins, which may necessitate further price increases, it warned.
Oceana's shares were up 0.59% to R55.99 in early trade on Monday, having fallen 2.34% in the year to date, and valuing it at over R7 billion on the JSE. Click here for details on Oceana's shares and other info.