• Oceana has seen its headline profit fall by 50%, due in part to higher costs related to lengthy audit process and forensic investigation.
• The owner of the Lucky Star canned fish brand hiked prices in January, and plans another increase next week due to fuel and freight cost pressures. 
• After PwC resigned as its auditor, citing a strained relationship with Oceana’s board, Oceana said it is “well placed” to appoint a new auditor – one of the Big Four – within the required 40 days.

Oceana’s revenue declined by 11% to R3.179 billion in the six months to end-March, with its headline profit halving to R153 million.

The company owns canned fish brand Lucky Star and also sells fishmeal, fish oil and fish around the world.

Supply chain disruptions hit inventories of its canned fish, and canned fish sale volumes declined by 10% over the six months, partially offset by a 7% price hike in January. The company will hike its canned fish prices against next week due to higher fuel costs and freight charges on imported pilchards.

Its fishmeal and fish oil production at its US Daybrook operations was hit by Hurricane Ida in Louisiana, while Oceana also saw lower fish catches due to La Niña weather conditions.

Its profit was dragged lower by a 7% increase in overheads, which included R42 million in legal and audit costs related to the delay of its 2021 financial results.

Publication of the company’s 2021 results were delayed several times from October last year to early March this year due to two accounting issues.

The accounting issues relate to the treatment of the group’s 25% shareholding in US-based Westbank Fishing and the dating of signatures on an internal document relating to a $4-million insurance claim that was paid out to Oceana. A forensic investigation by ENSafrica found no evidence of “fraud, misappropriation or loss of funds or management of override of controls arising from any of the matters raised”.

This week, Zarina Bassa, chair of the Oceana audit committee, told Fin24 that PwC effectively “downed tools” during the investigation, which delayed the auditing process. Bassa also accused PwC of adopting an over-zealous approach following the probe, which resulted in the company missing audit deadlines.

READ | Oceana questions PwC’s objectivity, blames it for costly delays

At the last annual general meeting, shareholders holding 38% of Oceana’s shares voted against retaining PwC as the group’s auditors.

PwC resigned as auditors last week, citing a strained relationship with Oceana’s board.

On Thursday, Oceana said it was “well placed” to appoint a new auditor – one of the Big Four – within the required 40 days.

It also announced the permanent appointment of interim CEO Neville Brink, who assumed the role after CEO Imran Soomra resigned earlier this year.

The company’s chief financial officer remains on precautionary suspension and the outcome of the disciplinary procedure that took place in late May is due shortly.

The company says that its landings of anchovy and gulf menhaden in the current season continue to track well ahead of last year. Prices of both fishmeal and fish oil remain strong, supported by global aquaculture and animal feed demand.

The company declared an interim dividend of 55c, from 110c a year before.

Get the biggest business stories emailed to you every weekday.

Go to the Fin24 front page.

SOURCE:
Lucky Star owner plans second price hike this year as freight, fuel costs bite | Fin24 (news24.com)