[Cape Town, 08 November 2012] Oceana Group’s operating profit before abnormal items increased by 39% during the 2012 financial year due to improved performance by each of its business segments compared to the previous year. Headline earnings per share for the year ended 30 September 2012 increased by 37%, whilst earnings per share increased by 33%, compared to the previous year. A final dividend of 256 cents per share has been declared which, together with the interim dividend of 45 cents, brings the total dividend for the year to 301 cents per share, an increase of 37% on the 2011 total dividend of 220 cents.
According to Oceana Group Chairman, Mustaq Brey, “The canned fish business performed particularly well and, together with a turnaround in the fishmeal operation, was the main contributor to the rise in profit.”
In reviewing the group’s operations per segment, Oceana CEO, Francois Kuttel, states that, “Canned fish sales volumes on the domestic market were considerably higher than the previous year. The business continued to benefit from its market leading brand, Lucky Star, which is well positioned as an affordable protein in the lower LSM segments of the market. Further progress was made in securing a reliable international supply chain which translated into substantially higher working capital requirements. This was necessary to ensure availability of product which is dependent on the vagaries of worldwide pilchard fisheries. Although additional suppliers were contracted locally and in Namibia, imports increased as a proportion of total supplies.”
The 2012 Total Allowable Catch (TAC) for pilchard in South Africa was 100 595 tons (2011: 90 000 tons). Pilchard landings and processing yields at the St Helena Bay cannery were good and the company’s quota is expected to be landed in full by the close of the season. The Namibian pilchard TAC was 31 000 tons (2011: 25 000 tons) and all quotas contracted to the Etosha Fishing cannery were completed by the financial year end.
The anchovy A season TAC, which ended on 31 August, was 352 718 tons and B season 120 000 tons (2011: A season 270 291 tons; B season 120 000 tons). Oceana landed 75% of its A season quota and 30% of its B season quota, which resulted in significantly higher fishmeal and fish oil volumes than the previous year when only 47% of the A season quota was landed. Selling prices in rand terms were slightly higher on average over the year and the business returned to profitability having made a substantial loss last year.
With regard to Lobster, squid and French fries, Kuttel says, “The lobster business benefited from increased sales volumes from its high opening stockholding and profits were accordingly higher. Oceana’s poor squid catches over last summer season continued in the second half of the year with industry catches being the lowest experienced in the last decade. Selling prices increased in euro and rand terms, however, the business recorded a loss for the year. French fries performed well, driven mainly by strong volume growth in the quick service restaurant and value added segments. Higher volumes and improved production efficiencies reduced cost per unit. This resulted in a return to profitability for this business.”
The TAC for west coast lobster increased to 2 425 tons (2011: 2 286 tons). Quota available to Oceana for the season to 30 September 2012 amounted to 327 tons (2011: 325 tons), which was landed in full. Although the foreign selling prices were lower on average compared to the previous year, the weaker currency translated into improved selling prices in rand terms.
Kuttel states that horse mackerel showed a moderate increase. “The benefit of increased volumes and the more favourable exchange rate was partially offset by higher quota costs incurred as a consequence of the reallocation of rights in Namibia,” he says. That is, whilst the Namibian horse mackerel TAC increased to 320 000 tons (2011: 310 000 tons), new rights holders were allocated 41% of the TAC directed to midwater trawl resulting in a reduced allocation to the existing rights holders. In South Africa the precautionary maximum catch limit for directed catch of horse mackerel remained at 31 500 tons.
Horse mackerel catches in Namibia in the second half of the year were similar to the comparative period and overall for the full year they were higher due to the additional quota made available in the final quarter of calendar 2011. Fishing conditions off the South African coast were poor during the second half of the year. Catch volumes declined and fuel and employee costs were higher, increasing the cost per ton of fish caught. Selling prices were firmer particularly for large sized fish and effectively offset the higher fishing costs.
“The hake business showed an improvement on the previous year due to better catch rates, higher local and export selling prices and the favourable effect of the weaker rand,” says Kuttel.
According to Kuttel, the cold storage business experienced very good occupancy rates with high volumes handled at most of the stores in the second half of the year, primarily driven by poultry and fish. Kuttel says, “The additional capacity at the City Deep store was well utilised and proved to be a timely expansion. However, the fruit handling side of the business in the port of Durban was again disappointing, and although volumes increased the activity made a loss.”
Kuttel was pleased to report that the transfer of the hake, horse mackerel and cold storage businesses acquired from the Lusitania group and associated companies took place on 18 September 2012. As a result of the acquisition Oceana’s percentage ownership in the deep-sea and inshore trawl hake TAC increased from 1.0% to 3.3% and in the horse mackerel TAC from 30.7% to 34.7%. Approval for transfer of an additional hake quota representing 0.8% of the TAC is still outstanding. Included in the acquisition were two trawlers and quayside premises with a 4,400 pallet cold store. A decision by the Department of Agriculture Forestry and Fisheries for transfer of the south coast rock lobster fishing rights was not obtained and accordingly this element of the transaction has not been given effect.
In conclusion, the group believes it is well positioned to take advantage of opportunities for further organic and acquisitive growth.