Oceana Chairman, Mustaq Brey, reported a 63% increase in headline earnings per share for the six months ended 31 March 2008 compared to the previous year. Operating profit before abnormal items increased by 55%.
“The major contributing factors to the improved margins were increased sales of canned fish, improved export realisations and higher cold store occupancy levels,” Brey said.
Earnings per share increased by 48%. The difference between the headline earnings per share and earnings per share is mainly due to the inclusion of the profit on disposal of the abalone business in the prior year.
Commenting on the higher earnings per share, Brey said that the weighted number of shares in issue was reduced by the specific repurchase of 2.6 million shares. This contributed to higher earnings on a per share basis.
In his review of operations, Oceana CEO Andrew Marshall said that profitability from canned fish was higher than in the same period last year despite the reduction in the pilchard total allowable catch (TAC). The 2008 TAC had been reduced to 90 776 tons (2007: 162 436 tons). Sales volumes of canned fish increased mainly due to substantial quantities of imported product as well as stock carried over from the previous fishing season in Namibia. The Namibian pilchard TAC was recently announced as 15 000 tons (2007: 15 000 tons) and fishing should commence later this month.
Glenryck Foods in the UK improved its margins on good sales of canned pilchard and salmon products.
Fishmeal operations recorded a loss for the six months. The results were negatively affected by lower export selling prices and higher production costs which were impacted by rising energy prices. Landings of red eye herring were higher but reduced cannery pilchard offal resulted in overall production volumes in line with the comparative period. The anchovy A season TAC for 2008 is 247 500 tons (2007: 386 942 tons) which is mostly landed in the winter months.
The TAC for west coast rock lobster was reduced to 2 571 tons (2007:2 856 tons). Quota available to Oceana amounts to 374 tons (2007 actual catch: 550 tons). Marshall said that the lobster catch rates in certain areas were lower than the prior year and resulted in higher production costs per unit. Sales volumes were in line with prior year. High export prices and the benefit of a weaker rand exchange rate resulted in improved profitability.
“Squid catches from our vessels were above those of last year, whilst volumes handled on an agency basis were lower. Market prices were higher in euro and rand terms resulting in good increase in operating profit.”
Reporting on midwater and deep-sea operations, Marshall said that operating profit from horse mackerel was higher than last year, despite lower catches in Namibia.
“Horse mackerel catches in Namibia were well below prior year as a result of the non-availability of chartered vessels pursuant to their extended arrest by the Ministry of Fisheries and Marine Resources. Vessel costs per ton of fish caught increased, driven by higher fuel prices, labour costs and interrupted trips whilst selling prices increased as a result of the lower volumes available from Namibia.
In South Africa Oceana’s midwater trawler continued to perform well and the export market remained firm. Horse mackerel volumes sourced from external fleets increased significantly and good margins were realised.”
According to Marshall, an agreement has been concluded for the purchase of an additional midwater trawler. The investment including refurbishment costs amounts to R67 million. The vessel will be based in Namibia and is expected to be operational towards the end of the financial year.
Results from hake operations showed an improvement mainly as a consequence of higher prices and the rand exchange rate.
The Tuna business was sold with effect from 27 January 2008.
Reporting on cold storage, Marshall said that the operating profit increased substantially. “The cold storage division experienced much higher occupancies in most stores including those which were recently expanded whilst handling activity levels were in line with the comparative period.”
Commenting on the outlook for the remainder of the financial year, Marshall said that “headline earnings for the full year are expected to exceed those of last year. However, second half earnings growth will be at a much lower rate than that of the first half.”
On 7 February 2008 Mr. N Dennis resigned from the board.
An interim dividend of 26 cents per share has been declared (2007: 19 cents per share).