Improved Earnings and Promising Outlook for Oceana
Oceana Chairman, Mustaq Brey, reported a 40% increase in headline earnings per share for the six months ended 31 March 2007 compared to the previous year.
These increased earnings were due to good catches in the horse mackerel, lobster and fishmeal sectors, higher export prices and the weaker rand exchange rate. Earnings per share for the same period were 50% higher mainly as a result of the profit on disposal of the Tuna Marine abalone business less impairment provisions raised.
Operating profit before abnormal items increased by 26% while headline earnings increased by 25%. The weighted average number of shares in issue was lower due to the shares held by the black employee share trust (Khula Trust) being treated as treasury shares. This contributed to higher earnings on a per share basis.
Commenting on long term commercial fishing rights, Brey said that certain Group subsidiaries were involved in a number of review applications brought in the High Court by various parties regarding the allocations. Completion of this legal process was expected to take some time.
In his review of operations, Oceana CEO Andrew Marshall reported that profitability from canned fish was considerably lower than in the same period last year. The 2007 pilchard total allowable catch (TAC) had been reduced to 162 436 tons (2006: 204 000 tons). Pilchard landings increased but were still insufficient to meet consumer demand. Fish was being caught on the south and east coasts with good catches made recently along the west coast. Canning yields were poor, particularly at the beginning of the season, but had since improved. Pilchard fishing had not commenced in Namibia where the announcement of a provisional TAC in Namibia is still awaited. Sales volumes of Lucky Star canned fish decreased on the domestic market due to supply shortages. In the UK, Glenryck Foods experienced difficulties in pilchard procurement.
Fish meal operations recorded a profit due to significantly higher prices on export markets. Landings of industrial fish were higher, being mainly red eye herring. The anchovy A Season TAC of 186 942 tons (2006: 212 251 tons) is normally landed in the winter months.
The TAC for west coast lobster was reduced to 2 774 tons (2006: 3 173 tons). The uncaught quota from 2006 was carried forward for catching in 2007. Oceana quota available amounts to 551 tons (2006 actual catch: 366 tons). Commented Marshall, “Improved profitability to date resulted from good lobster landings, lower production costs, higher export prices and the weaker rand exchange rate. Squid catches were below those of last year but higher market prices resulted in increased profits.”
Overall operating profit from horse mackerel was higher than the previous year. Although turnover declined due to lower volumes sourced from external fleets, catches were higher, vessel costs per day reduced and selling prices remained at high levels. Hake operation profits improved due to better fishing conditions and higher prices offset by the effect of lower quotas.
Profits in the Cold Storage division were substantially lower. Although stores handled higher volumes, shorter dwell times resulted in lower revenue. Demand for french fries remained strong giving good profit growth.
On 8 February 2007 Ms L Ruthilal resigned and Mrs ABA Conrad was appointed to the board. On 11 May 2007 Mr F Robertson was appointed to the board.
Commenting on prospects, Marshall said, “We are hopeful that the recent improved trend in pelagic catches will continue as well as sales volumes of canned fish. Prospects remain good for high selling prices in international markets for fishmeal, lobster, hake, squid and tuna. We expect a slow down in horse mackerel winter fishing volumes, as well as pressure on hake catches due to TAC reductions. Production volumes in the french fries business should remain consistent and commercial cold storage occupancy volumes are expected to increase. Although we anticipate that second half earnings will be at a lower rate than in the first half, headline earnings for the full year are expected to exceed those of last year.”
An interim dividend of 19.0 cents per share has been declared (2006: 15.0 cents per share).
11 May 2007
For further information please contact:
Andrew Marshall – CEO: Oceana Group Limited
Tel:+27 21 – 419 5911 Fax:+27 21 – 419 5987 e-mail: firstname.lastname@example.org