Oceana Group has announced an increase of 6% in its operating profit before abnormal items compared with the 2010 financial year with significant improvements in the horse mackerel and canned fish business units being largely offset by disappointing results in fishmeal and certain other business units. Turnover increased by 7% and headline earnings per share for the year rose by 6% and earnings per share by 13%.
According to Oceana Group Chief Executive Officer, Francois Kuttel, “The aggregate performance of the group over the past year reinforces the advantages of the level of diversification within our operations.”
A final dividend of 183 cents per share has been declared, which together with the interim dividend of 37 cents, brings the total dividend for the year to 220 cents per share, an increase of 6% on the 2010 total dividend of 208 cents.
The summary review of the group’s operations is as follows:
The 2011 Total Allowable Catch (TAC) for pilchard in South Africa was 90 000 tons (2010: 90 000 tons). Pilchard landings and processing yields at the St Helena Bay cannery were in line with the previous financial year and the company’s quota has been landed in full. The Namibian pilchard TAC was 25 000 tons (2010: 25 000 tons). Etosha Fishing landed its quota in full. Canned fish sales volumes on the domestic market were considerably higher in response to significant promotional activity in the initial months of the financial year. Further improvements were made in the management of the supply chain which resulted in continuous availability of product from both local and offshore suppliers and a reduction of inventory levels. A larger proportion of product was sourced locally compared to the previous year. The landed cost of imported product reduced as a consequence of the strong rand exchange rate which benefitted returns. Canned fish sales in the United Kingdom declined as a consequence of the business restructure and difficult trading conditions. Overall, profitability from canned fish operations was well above the prior year.
The anchovy A season TAC which ended on 31 August was 270 291 tons and B season 120 000 tons (2010: A season 453 183 tons; B season 120 000 tons). Oceana’s landings of anchovy were 43% lower than the prior year at 21 444 tons, comprising 47% of its A season anchovy quota (2010: 37 555 tons being 49% of A season quota). No anchovy has been available in the catching areas during the B season. Landings of red-eye herring were also poor and lower than last year. Fishmeal production volumes were consequently well below those of the previous year. Weak demand in international markets as well as increased supply from Peru put pressure on fishmeal prices which together with the low volumes resulted in a substantial loss for the financial year.
The TAC for west coast lobster reduced to 2 286 tons (2010: 2 393 tons). Quota available to Oceana for the season to 30 September 2011 amounted to 324.8 tons (2010: 347.5 tons) of which 99.8% was landed. Selling prices were higher in foreign currency terms although turnover was adversely affected by a stronger rand exchange rate. Profit from lobster declined compared to the prior year mainly due to lower sales volumes.
Squid catches were lower than the prior year. Euro selling prices improved. The business made a small loss for the year.
The French fries business suffered a loss due mainly to competition from lower priced imports.
MIDWATER AND DEEP-SEA FISHING
The Namibian horse mackerel TAC increased to 310 000 tons (2010: 247 803 tons). The portion of TAC previously held in reserve has largely been allocated to the existing quota holders. In South Africa the Precautionary Maximum Catch Limit remained at 31 500 tons. Catch rates per day improved in both Namibia and South Africa resulting in a lower average catch cost per ton and higher volumes for the year. Trading conditions in our major markets remained firm and access to the Angolan market was re-established. Volumes procured from external fleets increased due to favourable market opportunities. Turnover and profit rose substantially on the back of higher volumes.
The hake business showed an improvement on the prior year. The group acquired an increased shareholding in a joint venture resulting in the consolidation of its financial results from July 2011.
Revenue declined at most of the division’s facilities as a result of lower occupancy levels and throughput volumes of frozen product. The impact was mainly felt in Durban and Cape Town, on both locally produced and imported product. The City Deep store experienced a similar volume to the previous year despite expansion of the facility. The fruit handling business in Durban performed poorly although a larger volume of commercial fruit was handled. Overall operating profit was lower than last year.
Further cautionary announcement
Further to the cautionary announcement published on Securities Exchange News Service on Monday, 24 October 2011 and in the press on Tuesday, 25 October 2011, Oceana shareholders are advised that negotiations are still in progress which, if successfully concluded may have a material effect on the price of the company’s securities. Accordingly shareholders are advised to continue exercising caution when dealing in the company’s securities until a further announcement is made.
In conclusion, the group is confident that it is well positioned to take advantage of opportunities for further organic and acquisitive growth.