Cape Town, South Africa-based seafood company Oceana Group has dismissed its chief financial officer, Hajra Karrim, with immediate effect, alleging gross misconduct, continuing a string of shake-ups in its executive suite.
Karrim has been suspended since early February 2022, and a statement by the company's board of directors said her termination “results from the completion of a disciplinary procedure that resulted in her summary dismissal based on findings of gross misconduct.” Karrim’s tenure as an ex-officio director of Oceana has also been terminated.
The disciplinary process was chaired by a retired judge of the Supreme Court of Appeal, and brings Karrim's tenure to an acrimonious end. She was appointed to serve as CFO and executive director in November 2020, following a stint at the TransUnion Africa Group, part of the New York Stock Exchange-listed TransUnion LLC Group.
Oceana has appointed Ralph Buddle to the CFO position on a temporary basis “while the company completes the process of appointing a suitable replacement.”
The dismissal of the CFO coincided with the appointment of Neville Brink as group CEO by the board of directors, effective from 2 June, 2022 – four months after he was appointed interim CEO of the company following the resignation of its former CEO, Imraan Soomra, on 14 February amidst a long string of delays to its audited financial results. Additionally, on 27 May, 2022, PricewaterhouseCoopers resigned as the company's auditor.
Oceana recently released unaudited results for the six months ending 31 March, 2022, a period the board of directors called “the most-difficult first half" in the company's history.
Oceana Group’s revenue dipped by 11 percent to ZAR 3.2 billion (USD 206 million, EUR 193 million) compared to ZAR 3.6 billion (USD 231 million, EUR 216 million) for the same period of 2021, while its gross margin was 3.7 percent lower at 30.2 percent, down from 33.9 percent for six months ending 31 March, 2021.
Oceana attributed the revenue dip to COVID-19 supply chain disruptions, the civil unrest in Kwa-Zulu Natal that impacted its South African canned fish sales volumes, and Hurricane Ida in the U.S. state of Louisiana, which impacted fishmeal and fish oil production at the company’s U.S.-based Daybrook operations.
Oceana’s headline earnings decreased by 50 percent to ZAR 153 million (USD 9.9 million, EUR 9.3 million) down from ZAR 304 million (USD 19.7 million, EUR 18.4 million) in 2021, while headline earnings per share was down 51 percent to 126.4 cents (USD 0.008, EUR 0.007) per share compared to 260.5 cents (USD 0.017, EUR 0.016) per share in 2021.
Elsewhere, Oceana’s operations generated ZAR 322 million (USD 20.9 million, EUR 19.5 million) in cash – far below the ZAR 617 million (USD 39.9 million, EUR 37.4 million) generated in 2021. The company attributed the drop to a lower level of operating activity, increased investment in working capital to rebuild inventories, and repayment of term debt of ZAR 89 million (USD 5.7 million, EUR 5.4 million) up from ZAR 30 million (USD 1.9 million EUR 1.8 million) for 2021.
Oceana’s canned fish and fishmeal volumes in Africa recorded a 10 percent decline due to “continued global supply chain disruptions and last year’s Kwa-Zulu Natal civil unrest resulted in unfulfilled customer demand throughout the period.”
Furthermore, the lower opening inventories of fishmeal and fish oil, resulting from the weather-disrupted fishing season of 2021, reduced sales volumes by 47 percent, “but this was partly offset by higher oil yields and significantly higher global price support for oils driven by improved demand from aquafeed producers in building inventories to mitigate against supply chain risks,” the company said.
Similarly, Oceana’s fishmeal and fish oil operations in the U.S. started the half year ending 31 March, 2022 on low opening inventory levels due to the poor fishing and weather events, most notably Hurricane Ida in August 2021, resulting in reduced sales volumes by 33 percent for fishmeal and 15 percent for fish oil – forcing Daybrook to under-supply contracts concluded during the prior season.
Horse mackerel sales volumes also dropped by 15 percent, impacted by La Niña weather conditions in South African waters and scheduled vessel maintenance in Namibia.
Hake sales volumes increased by 8 percent, but export pricing was constrained by lower value hake sizes, a high level of low value bycatch mix, and a stronger South African rand, Oceana said.
A 20 percent reduction in the offshore commercial total allowable catch (TAC) of West Coast rock Llbster, implemented to counter the impact of continued high levels of poaching, impacted the company’s catch for the six months.
“The lower catch rates experienced in the period support the decision to lower the TAC,” Oceana said.
The company’s commercial cold storage and logistics segment recorded a 9 percent reduction in occupancy levels “mainly due to increased global cost and availability of containers and the resulting lower level of import activity through Cape Town.” This led to revenue decreasing by 28 percent and operating profit by 47 percent.
Oceana’s board declared an interim dividend of ZAR 0.55 (USD 0.00036, EUR 0.00033), 50 percent lower than the ZAR 1.10 (USD 0.007, EUR 0.006) per share declared for similar period in 2021.
Despite its recent turmoil at the executive level, Oceana Group said it is optimistic of a better second half, traditionally the company’s stronger half, driven by “strong local and global demand, pricing across all our operating segments, and the performance of the South African anchovy and U.S. Gulf [of Mexico] menhaden fisheries.”
But the continued uncertainty of the effect of the Ukraine war on oil prices is likely to increase operational cost pressures, especially on vessel operations, the company said.
“The sanctions on Russia have created supply constraints in the whitefish sector which has created new customer opportunities in Europe and the freight costs that are now showing small signs of reduction, and the increasing container availability, is likely to support the recovery of import volumes, benefitting cold storage occupancy,” the company said.
Photo courtesy of Oceana Group
