Sales volumes in Oceana Group’s Lucky Star division dipped 2% in the 11 months to August 25, 2024, the company said on Monday, highlighting that that had been worsened by a 26% fall in production volumes in its first-half period.
The 2% decline in sales volumes for the 11 months under review was recorded against the backdrop of record volumes sold in the prior comparative period, Oceana said in a trading update.
However, Lucky Star was capitalising on its recent investments to drive volume growth.
“Lucky Star continues to drive growth of canned fish through product affordability, availability and versatility, and optimise its recent canned meat and chicken liver investments to capitalise on its brand strength and wide distribution reach,” said Oceana.
During the first half to the end of March, Oceana closed both West Coast plants for Lucky Star earlier than usual to implement factory upgrades. This resulted in a 26% plunge in production volumes for the first-half period.
Despite this, the company saw production volumes rebounding back to full production in second half, with enhanced efficiencies and improved margins resulting from higher volumes of locally landed fresh pilchards.
Inventory for the period under review closed at similar levels to the previous comparative 11-month period, said Oceana of of its Lucky Star division.
Other divisions under the company, such as Daybrook, continued building on the strong first-half performance although the group’s financial performance for the 11 months were impacted by “the disappointing performance of both the South African and Namibian horse mackerel businesses in the Wild Caught Seafood” segment.
Its Africa fishmeal and fish oil sales volumes also decreased, by 16%, due to lower opening inventory levels and lower volumes produced in the period.
“Raw material available for production in the period declined due to the combined effect of reduced pilchard trimmings from the cannery and lower anchovy landings, which were affected by prolonged adverse winter weather conditions,” said Oceana.
However, improved yields oil yields, strong US dollar fish oil prices and the weaker rand exchange rate had partly offset the impact of lower sales volumes under the category. Moreover, recent plant upgrades for the Africa fishmeal and fish oil division yielded benefits through increased efficiency and enhanced product quality.
Oceana’s hake business “showed a marked improvement” for the period as sales volumes increased by 31% with improved seadays and catch rates resulting in better fleet performance.
Strong European demand had also underpinned firm pricing. Nonetheless, horse mackerel sales volumes in South Africa were 84% lower while operating performance declined significantly.
In Namibia, horse mackerel performance was negatively impacted by a combination of lower sales volumes that resulted from decreased catch rates, and weaker market prices.
Worse still, vessel operating costs rose by 19% due to the lower catch rates although good squid catches led to increased sales volumes, but lower sales prices offset the benefits. This had yielded “a reasonable performance that was consistent” with the prior period.
In its prior year, Oceana disposed of its interest in CCS, realising a pre-tax profit of R477 million and R381m in post-tax profits. This had translated to a 314.4 cents increase in earnings per share compared to the previous year.
BUSINESS REPORT