Highlights for the year ended 30 September 2020:
- Group revenue up 9% to R8,3 billion while operating profit increased by 21% to R1,4 billion.
- Solid performance in canned fish and fishmeal and oil segments
- Pre-tax profit growth of 28% while headline earnings per share improved by 15%.
- Strong cash generation and improvement in gearing to 1.4 times net debt to EBITDA from 2.2 times in 2019.
- The company has declared a final dividend of 293, up 22% on last year.
Africa’s largest fishing company and one of the most empowered food companies on the JSE, Oceana Group Limited, attributes its stand-out performance during one of the most challenging years in global history, to the commitment and hard work of its people.
Our people, our priority
“For this set of results, we must first look beyond the numbers and acknowledge the great effort of our workforce in all the geographies in which we operate. Having been classified as essential services in South Africa, Namibia and the USA, our frontline workers across these countries responded selflessly and heroically to the need to provide food security in extremely uncertain times, leaving their families to help keep our production and supply chains operating seamlessly,” says Group CEO, Imraan Soomra.
The group managed to keep infection rates low by applying stringent health protocols to protect its people. “Notwithstanding the immense economic implications of the pandemic, we understood that this was a humanitarian crisis that demanded courageous and visible leadership. My leadership team and I were at the coalface of our operations, engaging our workforce on the production lines and on our vessels from the very commencement of lockdown. We were humbled by the positive response to this collaborative approach which drove strong attendance levels and improved efficiencies across all our operations, including that from support teams working behind the scenes and from home.”
The group operates in South Africa, Namibia and the United States of America and markets fish-based products in 46 countries across the world, managing a fleet of 54 vessels and eight cold storage facilities. “Our customers are located across the world, with fresh fish being in demand in Africa and Europe, pet food in the US, fishmeal in Europe, Africa and Asia, and canned fish in South Africa. Diversification of both supply of raw materials and demand for our products has been key to delivering strong results this year,” adds Soomra.
The group’s continued focus on ensuring affordability and accessibility of Lucky Star, Oceana’s iconic canned fish product, yielded a resilient performance by growing core volumes driven by strong in-home consumption and improved feeding scheme volumes. Canneries in SA and Namibia delivered production and supply chain efficiencies to offset the significant increase in the cost of imported raw material, which ensured further cost containment to assist consumer affordability.
The group’s fishmeal segment operates primarily in the USA and South Africa supplying fishmeal and fish oil to a global customer base. Overall performance for this segment improved materially, driven by firm pricing particularly in the US pet food sector and good catch rates in both geographies. Landings in South Africa were up 20%.
Covid-19 disruptions and an abnormally active hurricane season further hampered operations in the US. The business was able to absorb the effects of these impediments growing profits in the segment by 18%.
Strong demand for fresh fish protein, particularly in Sub-Saharan Africa, contributed to similar growth in the group’s mackerel, hake and cold storage operations, with these segments delivering operating profit growth of 20%.
Oceana introduced proactive measures to strengthen the balance sheet and optimise cash flow during the year, resulting in a significantly strengthened balance sheet and reduced debt levels. Cash balances improved significantly to R1 212 million while US debt remains ringfenced and serviced by strong US cashflows. Net debt to EBITDA improved to 1.4 times from 2.2 times last year.
The group incurred incremental costs of R50 million in the provision of personal protective equipment, dedicated staff transport, food parcels and recognition bonuses for frontline workers. In addition, the estimated loss of earnings due to lost fishing days, primarily in the USA and Namibia, is estimated at R75 million.
Looking to the future
With environmental sustainability at the forefront of its strategy, the group launched its Carbon Neutrality Project aimed at reducing emissions by 50% by 2030 and targeting zero emissions by 2050. This includes mega renewable energy projects, particularly on the South African west coast, which will have a lasting impact on the communities in which we operate.
Over the medium term, the group expects a growing demand for its products. It will look to earnings growth in canned fish by keeping it affordable and consistently supplied. With fishmeal and fish oil, the group anticipates increased consumption in aquaculture, farming and the US pet food sector, and improved volumes in US fishmeal from investments in catch and processing capacity which is expected to yield results from the commencement of the new fishing season.
“While in-home consumption, strong inventory management and our affordability strategy will position us well for the next year, we are mindful that a second wave of the Covid-19 outbreak, particularly a prolonged one that potentially extends into the second half of 2021, may disrupt fish supply and availability. We continue to monitor global trends and refine our operational tactics accordingly.”
As per government timelines, the 2021 Fishing Rights Allocation Process in SA will conclude during November 2021. The group is confident of an objective and transparent policy setting, application and adjudication process. As a level-1 B-BBEE contributor with over 70% black ownership, Oceana believes it is well-positioned to contest for the renewal of its fishing rights.
“I want to reiterate that this is an extraordinary outcome in a period of enormous disruption and cannot emphasise strongly enough the role of Oceana’s people in delivering these results. We remain mindful that this pandemic is far from over and with our people being our greatest asset, we will continue to do whatever we can to protect them.”
For further information, please contact Tamra Veley on 083 251 3658.