Oceana calls for urgent action on logistics and energy

Oceana chair Mustaq Brey has called for swift action by the government and Transnet to tackle the mounting challenges that have rendering the country’s ports, railways and harbours increasingly dysfunctional.

The owner of brands including Lucky Star tinned fish said in its latest annual report that subdued levels of consumer disposable income, ongoing geopolitical uncertainty, rising raw material costs and persistent electricity supply constraints had made for tough business conditions in SA hard in 2023.

A weakening rand, high inflation and interest rates coupled with poor municipal service delivery added further pressure, it added.

Brey warned that SA — home to Oceana’s primary operations — can’t afford the failures of SOEs and called for solutions to the logistics and energy crises.

“For the SA economy to grow unfettered, we need a logistics network of roads, harbours, rail and air that operates efficiently,” said Brey. “I am concerned at the current situation at Transnet and request the government and Transnet to act swiftly to avert a potentially bigger crisis,” he said.

“Our ports are critical to the country’s economic activity and this country cannot afford this becoming a bigger problem than it already is.”

JSE-listed Oceana, Africa’s largest fishing company and which is valued at about R8.8bn, operates in SA, Namibia and the US. Its operations are split into three categories the Lucky Star brand, Fishmeal and Fish Oil, and Wild Caught Seafood. 

Transnet’s long-standing rail infrastructure problems have been compounded by logistics bottlenecks at ports, severely constraining exporters and importers from getting their goods to market.

Oceana relies heavily on being able to gets its products from vessels at sea to canneries and processing facilities inland. Moreover, it is looking to take advantage of the El Niño weather phenomenon, which is expected to improve regional fishing conditions and the catch rates of SA hake, horse mackerel and squid.

Brey said the Cape Town-based firm expected continued strong demand and pricing in each of those categories, provided the logistics and energy problems are contained and overcome.

‘Expedite solutions’

“We need to expedite solutions to our energy crisis,” said Brey. “The loss in productivity, as we all know, has a very broad impact in every sector, most notably on jobs, which we can least afford. SA needs a growing economy to enable new jobs.”

Still, Oceana has been less affected by load-shedding than many companies as its canned goods don’t require refrigeration, which is useful to consumers. Fish is also growing in popularity as a relatively cheap form of protein.

In its recent results for the year to the end of September, the group said demand for Lucky Star tinned fish remained high with sales growing 9%.

“Our canned fish offerings are making an important contribution to food security in the country, providing a favoured protein option that is healthy, affordable and also shelf-stable, an attribute of added significance for customers and consumers in the context of sustained load-shedding,” Brey said.

Oceana dropped operating margins on Lucky Star to 8.5% from just over 10% to minimise prices increases and boost sales. As a result, revenue from the division was up just 4%.

Brey assured shareholders that the group’s leadership had been stabilised with the permanent appointment of Zafar Mahomed CFO, while Neville Brink’s tenure as CEO has been extended to the end of December 2026.

Brink was appointed CEO in June 2022 after three top executives and the external auditor resigned within the space of three months.

Mahomed was appointed in February to replace Ralph Bundle who stepped in on an interim basis after the controversial axing of Hajra Karrim.

“It is pleasing to see the positive morale across the company under its strong leadership team,” said Brey.

Oceana has managed to weather the storms of 2023 reporting that operating profit was up 20% to R1.5bn while headline earnings rose 29% to R951m. The group reported a 22% increase in group revenue to R10bn in part because of high fish oil prices due to a global shortage. 

However, the 105-year-old fishing group said oil exploration and proposed phosphate mining at sea were areas of concern for the stability and long-term sustainability of SA and Namibia’s fishing resources.

Oceana shares closed 1.87% higher at R69.27 on Tuesday, and have gained 10.6% over the past year.

With Katharine Child

gumedemi@businesslive.co.za