Sat, 14 Dec 2019

Fishing group Oceana's [JSE:OCE] headline earnings decreased by a whopping 25.1% due to a tax expense of R248m.

The owner of canned pilchards label, Lucky Star, on Thursday released its annual results for the financial year ended September 30, 2019.

According to the report, a once-off deferred tax adjustment resulted in headline earnings decreasing 25.1% to 544.3c, compared to the previous year's 727.1c . Excluding the adjustment, headline earnings increased 4.1%.

The group's tax expense of R248m was "materially" higher than the R0.8m reported in 2018.

"The 2018 financial year included a once-off release of deferred taxation of $18.6m (R238m) following the reduction in the federal corporate tax rate in the US from 35% to 21%, effective after December 31, 2018," the group explained.

Oceana declared a final dividend of 240c, bringing the total dividend for the year to 363c, lower than the 416c dividend declared in 2018.

CEO Imraan Soomra viewed the group's performance as solid, amid tough global economic conditions.

"On the whole, it has been a satisfactory year," he said.

By diversifying its portfolio, the group managed to achieve pre-tax growth of 2% to R897m, compared to R883m reported last year.

"The canned fish business - Lucky Star - had a standout year and delivered exceptional results, with a double-digit revenue growth of 12%, due to good volume growth in a tough trading environment.

"We also increased efficiencies and throughput, which unlocked cost savings of approximately R45m," Soomra commented.

While Lucky Star boasted sales volumes increasing 8%, overall group revenue remained flat at R7.65bn as growth in canned fish was countered by a decline in fishmeal and oil revenues. Costs remained flat too, with operating expenses relating to impairments.

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"The Fishmeal business had a challenging year. The extended winter in South Africa saw the Fishmeal Africa operation experience a 13% reduction in landings, and further impairments occurred as a result of our exit from the Angolan business. This impacted overall profitability in this segment," Soomra said.

"The overall business is robust, resilient and well-managed, evident by this year's performance.

"I am confident that the continued implementation of our diversification strategy will hedge against headwinds that may be brought on by a tough trading environment," Soomra added.

Oceana's share opened at R62.82 on Thursday, but closed 2.62% weaker than the previous close at R62.76

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