OCEANA GROUP’S INTERIM FINANCIAL RESULTS PAINT A POSITIVE PICTURE

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Oceana Group Limited (OGL) reported a 10% increase in headline earnings per share and a 30% increase for earnings per share for the six months ended 31 March 2011.

Operating profit before abnormal items increased by 11% compared with the first half of the previous year.

OGL Chairman, Mustaq Brey, said that the horse mackerel and canned fish business units were the main areas contributing to the improvement. According to Brey, the main reason for the differential in the increase in headline earnings per share and earnings per share is that, in the prior year, earnings were impacted by an impairment expense relating to goodwill arising on acquisition of the Glenryck UK business in 2004 which was adjusted for purposes of headline earnings.

In his review of operations in the inshore fishing sector, Oceana CEO Francois Kuttel stated that, “Overall, profit from canned fish operations was above that for the same period last year. Canned fish sales volumes on the domestic market were higher in response to significant promotional activity in the initial months of the financial year. Margins benefitted from the strong rand exchange rate during the period under review.” He added that pilchard landings to date to the cannery at St Helena Bay were reasonable with fishing expected to commence in Namibia later in May.

The restructure of the Group’s canned fish operation in the United Kingdom was completed and core products are now being supplied by Oceana Brands to a third party distributor under the Glenryck brand.

In the fishmeal division, landings of anchovy and red-eye herring for the season to date have been poor resulting in lower fishmeal production. The low volumes together with high maintenance and refurbishment costs resulted in a material loss at the half year.

Profit from lobster declined mainly due to lower sales volumes. Catch rates were good and landings in line with those of last year with less catch effort. Selling prices on average were higher in foreign currency terms. However, turnover was adversely affected by a 6% stronger rand exchange rate.

Squid catches from own vessels were in line with those of last year whilst volumes handled on an agency basis were lower. Euro prices improved slightly, but as for lobster, in rand terms the benefit was muted. Lower overall volumes resulted in a decrease in profits when compared to the comparative period.

Turnover in the French fries business suffered due to competition from lower priced imported product. This resulted in a decline in profit for the six months.

Significantly higher profits were recorded from horse mackerel in the midwater and deep-sea fishing sector. Catches increased in Namibia and South Africa as a result of technology and efficiency improvements made to vessels in the previous and current year, which had the effect of reducing the catch cost per ton. Conditions in OGL’s major markets remained firm and operating margins improved as a result of the aforementioned factors. Volumes procured from external fleets increased due to favourable market opportunities. Turnover increased appreciably as a consequence of this trading activity and overall.

The hake business showed an improvement on the comparative period, which had been affected by a vessel breakdown.

Revenue for cold storage declined at most of the division’s facilities as a result of lower occupancy levels and throughput volumes. “The reduction in demand was in respect of both local and imported product. The expansion at our facility at City Deep, Johannesburg was commissioned in February,” Kuttel said.

Commenting on prospects, Brey stated that, “Generally, fishing conditions are expected to remain stable. Purse seine fishing conditions for anchovy should improve in the winter months, weather permitting. Higher fuel prices will impact fishing costs in the second half, particularly midwater and deep-sea trawling sectors. Oceana’s export markets in Africa and the Far East are expected to be stable whilst its European markets may show some improvement albeit off a low base. Further volume increase is anticipated in the local market for canned fish. In the cold storage division, improved fruit volumes will be handled this export season compared to the previous year.” Headline earnings for the full year are expected to exceed those of last year, although the forecast information has not been reviewed or audited by the company’s auditors.

An interim dividend of 37 cents per share has been declared (2010: 33 cents per share).

For further information please contact:
Anthea Abraham: Communications Manager
Oceana Group Limited
Tel: +27 21 – 410 1427 / Cell no: 082 041 0041 / E-mail: aabraham@oceana.co.za / Visit: http://www.oceana.co.za/