A Positive Year for Oceana Despite Tough Conditions
Oceana Chairman, Mustaq Brey reported that in a very difficult year for the fishing industry due to poor fishing conditions, the group achieved very pleasing results.
Brey reported earnings per share for the year ended 30 September 2006 increased by 19% compared to those of the previous year. Headline earnings per share were 6% above last year. There was a decrease in group turnover of 1% while operating profit before abnormal items increased by 1%. Net cash balances reduced to R126.7m as a result of the group’s contribution to the funding of its black economic empowerment transaction during September 2006.
Commenting on the results, Brey stated: “2006 was a very positive year for Oceana in which it successfully concluded two processes which will have a beneficial long term effect on stability and earnings potential. These processes being the BEE transaction securing Oceana’s black shareholding and the long-term commercial fishing rights application and appeals process.
Oceana CEO Andrew Marshall stated: “Despite difficult fishing conditions in most of the fishing sectors in which the group is active, operating profit and headline earnings were ahead of last year. This achievement underscores the importance of the group’s strategy of investment and growth in a broadly diversified range of sectors.”
Marshall continued: “The group’s fleets and processing facilities performed well in terms of efficiencies, yields and cost containment. Product quality, efficient distribution, marketing, brand protection and development were well managed. Demand for the group’s range of products and services were good.
When commenting on pelagic fishing operations, Marshall said that although pilchard landings for canned fish production for the financial year were higher than last year, fish was only available on the south and east coasts and a higher proportion was transported by road from Mossel Bay to the cannery at St. Helena Bay. Higher fuel prices and the distance from the fishing grounds impacted on the cost of production.
“Due to shortage of supply, sales volumes for Lucky Star canned fish in the domestic market decreased significantly compared to the previous year,” said Marshall. “Though overall profitability from canned fish was well below that of the previous year, the group’s canned fish business in the UK, Glenryck Foods, performed well and achieved increased sales volumes particularly in the tuna category.”
Marshall went on to say that fish meal operations again showed a turnaround in the second half of the year and achieved a break even result overall though landings of anchovy and pilchard for fish meal production were well below the previous year.
Lobster landings were below last year due to a combination of a reduced TAC, a permit requirement limiting catches to 76% of quota and rough sea conditions in August and September. Turnover declined due to the reduced volumes despite improved export prices. Profits were slightly above the previous year due to lower costs. Squid catches were higher than the previous year and improved export prices resulted in a good contribution.
Selling prices for Namibian and South African horse mackerel were good in the first half of the year and were on average higher than the previous year. Higher fuel prices impacted on the fishing costs despite conversions to the vessels to enable the use of cheaper fuel grades. Overall, profitability from midwater pelagic operations was significantly higher than that of the previous year. Hake results showed higher sales realizations and together with reduced overhead costs resulted in acceptable earnings for the year even though hake continued to be affected by inconsistent catches and a large proportion of small fish. The restructured tuna trading business experienced competitive market conditions yet recorded a profit after last year’s losses.
In his review of cold storage Marshall said, “Average occupancy levels were high and in line with those of the previous year, however citrus volumes handled through the steri-fruit facility were disappointing and profits improved only marginally on the previous year.”
On the long term rights process Marshall said, “After a protracted application and appeal process, long term commercial fishing rights were allocated in all fisheries in which Oceana is active. Whilst our allocations were reduced, Oceana now has the certainty and stability of long term rights. Legal challenges have been brought by certain other applicants regarding their allocations.”
Oceana’s BEE transaction was implemented on 28 September 2006.
Marshall continued: “The finalization of the long term rights process will present opportunities for rationalization and restructuring within the South African fishing industry. With its strong balance sheet and secured BEE shareholding, Oceana is well placed to participate in any consolidation.”
A final unchanged dividend of 59.0 cents per share has been declared which together with the interim dividend of 15.0 cents brings the total dividend for the year to 74.0 cents per share. (2005: 74.0 cents)
10 November 2006
For further information please contact: Mbuyi Mtsheketshe, Oceana Group Limited
Tel: +27 21 –410 1400 Fax: +27 21 -419 5979 e-mail: email@example.com