Oceana reported a 5% increase in headline earnings per share for the six months ended 31 March 2010 compared to the previous year.
Oceana Chairman, Mustaq Brey, said that the Group experienced good catches in the pilchard, anchovy, redeye herring, horse mackerel and lobster sectors but overall, profits were offset by a firm rand exchange rate, pressure on some selling prices in European markets and high maintenance costs in certain divisions.
Operating profit before abnormal items increased by 10% compared with the first half of the previous year due to improved results from each of the three segments.
In his review of operations in the inshore fishing sector, Oceana CEO Francois Kuttel said that overall profit from canned fish was above that of the same period last year. Pilchard landings and processing yields at the St Helena Bay cannery were good. Fishing in Namibia commenced in May and similar landings to last season are expected. However, overall production at Etosha is expected to be higher for the year due to the canning of frozen fish from Morocco.
Commented Kuttel, “Canned fish sales volumes increased due to a more robust supply chain with imported product continuing to supplement local supplies. Margins showed some improvement and Lucky Star’s market share recovered further as a result of higher sales.” However, Kuttel went on to say that market conditions at Glenryck in the United Kingdom were extremely difficult with margins under pressure due to pound weakness and competitor activity.
In the fishmeal division, turnover declined due to lower volumes mainly as a result of low opening stock and poor landings at the end of last season. The lack of volume and high maintenance costs incurred during the annual shut down period resulted in a loss at the half year. “It is anticipated that higher landings will continue into the winter. In addition, fishmeal selling prices increased substantially in recent months due to concerns of an international market shortage, the benefits of which should be seen in the second half,” said Kuttel.
Profits from lobster increased due to higher sales volumes and lower unit costs. Catch rates were substantially better than last year, resulting in lower catching cost per unit, and 53% of Oceana’s quotas were landed compared to 28% at the same time last year. Selling prices were higher in foreign currency but lower in rand terms.
Profits were recorded in the squid division despite selling prices in European markets remaining under pressure.
Profit for the six months in the French fries business declined due to substantial increases in the purchase cost of potatoes following major crop failures in the growing areas, and the lower production and competitive imported product.
In the midwater and deep-sea fishing sector, profit from horse mackerel was slightly up on the comparative period. Catch rates in Namibia were very good. In South Africa, less favourable fishing conditions resulted in lower catches. Vessel operating costs in both Namibia and South Africa were lower due to reduced fuel and maintenance costs.
Selling prices were generally higher in US dollar terms but lower on conversion to rand. Horse mackerel trading volumes out of Mauritania and the South Pacific were significantly lower.
Hake made a loss for the period as a result of low selling prices, the firm rand exchange rate and costs of a breakdown on one of the vessels.
“Revenue and operating profit in the cold storage sector increased,” said Kuttel. “This was due to higher frozen capacity in the division, a higher overall occupancy rate and an increase in the number of pallets handled. Further expansion of the City Deep facility is currently in progress.”
Commenting on prospects, Mustaq Brey said, “Fishing conditions in the southern African region are expected to remain reasonably stable. Our South African, other African and Asian markets are anticipated to show growth whilst our European export markets have yet to recover to levels experienced before the global economic crisis.”
An interim dividend of 33 cents per share has been declared (2009: 31 cents per share).
06 May 2010
For further information please contact:
Mbuyi Mtsheketshe : Corporate Affairs and Transformation Manager
Oceana Group Limited
Tel: +27 21 – 410 1400 Fax: +27 21 – 419 5979 Cell no: 082 464 9747