• Oceana says it has four months’ inventory to meet demand for its Lucky Star canned fish products, but there could be shortages thereafter if it cannot replenish stocks.
• CEO Neville Brink, however, is confident the group will be able to replace supplies, saying current constraints, driven by issues such as global warming, are short-term.
• The company’s US fishmeal and fish oil business appears poised to benefit from an expected hike in prices.
• For more financial news, visit News24 Business.

Facing raw material supply constraints for its Lucky Star canned fish products, Oceana has four months’ inventory to meet demand but warns that shortages may loom thereafter if it cannot replenish stocks.

However, CEO Neville Brink is confident the JSE-listed fishing group will be able to replace its supplies for its popular Lucky Star products and that these constraints, driven by issues such as global warming, are short-term.

In the meantime, Oceana is carefully allocating its supplies to customers to avoid a supply crunch.

Even with these constraints, Lucky Star, along with its Wild Caught Seafood business, was a standout performer for Oceana in the six months to end-March, helping to drive strong headline earnings per share of 7.7% to 349.8c, even as its topline fell 6% to about R4.87 billion and its total operating profit dropped by 1.6% to R665 million. Oceana saw its after-tax profit rise 5% to R422 million, from R402 million previously, and maintained its interim dividend at 110c per share.

These strong performances from the two divisions offset weaker results from its fishmeal and fish oil businesses, which were affected by lower catch volumes in South Africa and weaker global prices.

The market reacted favourably to the results, with Oceana shares surging nearly 9% to R59.85 by Thursday noon.

Brink said the group, which sources 80% of Lucky Star raw materials from geographies outside SA, was holding back on promotional activity to manage its supply.

He also did not foresee the supply issues interfering with its plans for Lucky Star to re-enter the UK market after receiving strong orders in the region.

Asked specifically by News24 if there could be shortages of Lucky Star canned fish products on supermarket shelves, Brink said he did not think so, as there is “sufficient stock for us to cover, to certainly go forward, for the next four months”.

“The question is, can we thereafter? If we don’t find supply, then there may be a shortage.”

Lucky Star is also limiting “volume offtake by being scarce in our promotional activity”.

“It’s a double-edged sword. We are artificially reducing volume output to try to manage the stock that we have going forward over the next three to four months, and hopefully by then we will have the replacement stock,” Brink said.

Asked by an analyst how Oceana would balance the planned expansion of Lucky Star into the UK against current constraints, Brink said Oceana was always focused on growing the brand and that “this [supply constraint] is, in my mind, a short-term blip”.

He said indications were that the biomass in nearby Namibia, for instance, is “coming back strongly”, making plenty of room for growth.

Even so, the group will need to strike a balance as it expands offshore, optimising supply allocations to manage customer demand.

Brink said:

“Even the new countries we go to will be limited in terms of supply. It is a fine balance.”

Brink said the fish supply shortages were driven by a “combination of climatic conditions”, with global warming having a definite effect on the movement of fish. While the marine animals are not exactly dying off, the world's sardines and pilchards are migrating from their usual grounds in search of colder waters.

This resulted in short-term shortages in some specific geographies where Oceana, which sources its fish from all over the world, operates.

For example, the West African resource “went through a tough time” in the past two or three years due to shortages, but these supplies are now “coming back” in the region and in Namibia, which also experienced shortages over several years.

The Namibian development is promising because of its close proximity to SA, Brink pointed out.

Profit surge

Breaking down the group’s total performance, the Lucky Star division delivered a 4.4% revenue growth amounting to R2.7 billion, a more than 40% surge in operating profit to R324 million, and an improvement in the operating profit margin to 12% from 8.9% previously.

The Wild Caught division, meanwhile, saw its topline rise more than 19% to R1.017 billion from R854 million previously, with operating profit almost trebling to R204 million from R74 million in the same period last year.

But local fishmeal and fish oil operations were another story. Here, there was a more than 90% plunge in the topline from R281 million to R21 million, with the operating loss widening sharply to R139 million from R5 million.

The US fishmeal and fish oil business also experienced a revenue slide, with a more than 22% fall in the topline to R1.139 billion from R1.46 billion previously, and a nearly 27% drop in operating profit from R377 million to R276 million.

But the US business, which had good catches, is poised to benefit from upward pressure on global fishmeal and fish oil prices.

Oceana reported in its results that this trend was largely driven by the 36% reduction in the Peruvian anchovy first season quota to 1.9 million tons (3 million tons in March 2025). Compounding this impact, fishing performance in Peru has been weak, with only 24% of quota landed to date, heightening supply concerns and supporting higher prices, said Oceana.

Brink told News24 the group was waiting to see how severe the “Peruvian non-catch is going to be”.

He said if the season were completely shut down in Peru, it would have a “massive detrimental” effect on supply, causing prices to go through the roof.

“We know the price is going to go up. What I don’t know right now is how far it’s going to go. And if it’s going to go up substantially, I would rather them hold back a bit and sell later into the year, where the price potentially could go higher.”

‘Wake up and smell the fish oil’

Small Talk Daily analyst Anthony Clark said he had repeatedly suggested Oceana’s Daybrook operation in the US was in a good position to benefit from the supply-demand dynamics playing out because of the low catch rates in Peru.

This meant that while Oceana’s fishmeal and fish oil business had a difficult first half, the second-half performance is expected to be “materially better”, said Clark.

This would have a strong knock-on effect on earnings in the second half and result in “sharply higher rand profits”, which would inform his buy recommendation on Oceana.

“The market better wake up and smell the fish oil because this information has been in the wider public domain but mostly ignored by the chattering classes. So, from my perspective, Oceana right now at about R56 remains a very attractive opportunity for material earnings recovery and profitability in the second half.”

As for the supply constraints at Lucky Star, he said the group was confident in its ability to “secure enough sardines to meet their requirements”.

Clark said he visited Oceana’s local pilchard operations a few weeks ago and found that higher total allowable catch rates in SA, alongside ongoing international procurement, should help in navigating the situation.

“Oceana, as it stands right now, is looking very well placed, and investors who have ignored the stock for the best part of a year should start waking up and potentially putting Oceana in their nets as a purchase.”