Oceana Group Limited (Oceana) has reported an increase of 21% in basic earnings per share and basic headline earnings per share for the six months ended 31 March 2012. Revenue for the same period increased by 21% and operating profit before abnormal items increased by 41%, compared to the first half of 2011. An interim dividend of 45 cents per share has been declared (2011: 37 cents per share).
According to OGL Chairman, Mustaq Brey, the positive results were due to improved performance by each of the group’s three operating segments – Inshore Fishing, Midwater and Deep-sea Fishing and Cold Storage. He says a provision of R34.75 million for an administrative penalty agreed with the Competition Commission was disclosed as an abnormal item in the Statement of Comprehensive Income.
In his review of operations, Oceana CEO, Francois Kuttel, states that, “Within inshore fishing, canned fish sales volumes on the domestic market increased meaningfully, partially as a result of a more robust supply with imported product continuing to supplement local supplies. Canned fish sales in the United Kingdom continued to be impacted by pricing pressure.” Profit from canned fish operations was well above that for the same period last year.
Current season landings of anchovy and redeye herring to the group’s fishmeal plants were significantly higher than in the previous season resulting in improved production efficiencies and lower costs per ton of manufactured product. Sales on the local market had increased whilst export volumes were lower due to weak international demand and prices. Kuttel says fishmeal made a loss in line with budget expectations. The seasonal loss was materially lower than the prior year.
Catch rates of west coast lobster were lower than those of last year and landings for the season to date were lower, resulting in higher production costs per kilogram. However, higher export prices and the effect of the weaker currency translated into improved selling prices in rand terms. Profits from lobster were lower for the six month period.
Squid catches were well below the first half of last year with the industry as a whole reporting very poor catch rates. Despite poor economic conditions in our European export markets the lack of supply resulted in higher prices. The squid business made a small loss for the period.
The French fry operation returned to profitability due to increased volumes and lower production costs.
In respect of Midwater and Deep-sea Fishing, Kuttel says, “The initial allocation of Namibian horse mackerel quotas to existing rights holders (100 000 tons) was materially lower than in the previous year in order to accommodate new rights holders who received allocations totalling 100 000 tons. An amount of 90 000 tons of the TAC for 2012 (320 000 tons) is still to be allocated by the Minister. In South Africa the Maximum Precautionary Catch Limit for directed catch of horse mackerel remained at 31 500 tons. Catches were higher in Namibia for the six month period as a result of additional quota being made available in the final quarter of calendar 2011 when the company had four vessels in operation. Increases in fuel and other costs were contained on a per ton basis due to higher volumes caught. Significant additional costs were incurred in contracting the catching and marketing of quota allocated to new rights holders.”
Kuttel adds that, “Conditions in our major markets remained firm with the exception of the Democratic Republic of Congo where prices softened in recent months. Whilst margins were under pressure, profit from horse mackerel showed a moderate increase. Results from hake operations showed a substantial improvement mainly as a consequence of higher prices.”
Revenue from Oceana’s Cold Storage operating segment increased by 26%. According to Kuttel, this was due mainly to improved occupancy levels particularly in the second quarter but also due to the additional capacity at the City Deep facility. “The impact of higher occupancy levels has been offset to some extent by keener rates charged to customers. Overall profit from the cold storage business improved considerably.”
Commenting on prospects, Oceana’s Chairman stated that, “The group is well positioned to take advantage of opportunities for organic and acquisitive growth. The proposed transaction to purchase the hake, horse mackerel and south coast lobster fishing rights and related assets of the Lusitania group and associated companies as well as its cold storage business is still subject, inter alia, to the approval of the Minister of Agriculture, Forestry and Fisheries as well as the Competition Commission. Should the acquisition become unconditional, it is expected to be effective in August 2012. Furthermore, earnings for the full year are expected to exceed those of last year.”