Squid division now Premier’s star performer
The acquisition of Talhado is good news as it provides fishing rights and processing facilities in a profitable sector
Premier Fishing and Brands, which was listed on the JSE early in 2017, looks set to score from robust conditions in the squid sector.
Premier’s squid division was the star performer in interim results to end-February released on Thursday, with revenue up strongly at R30.6m from R18m and operating profits surging to R8.3m from R4.6m in the previous period.
Premier CEO Sabir Saban said the squid industry experienced exceptional catch rates, with the landed and sales volumes for Premier’s division more than doubling.
He said the market for South African squid remained stable despite the significant increase in landed volumes and the euro sales prices achieved
The robust squid sector is good news for Premier, which this week finalised the acquisition of a controlling stake in Port Elizabeth-based squid enterprise Talhado. Premier disclosed that Talhado’s revenue for the three months from the start of September 2017 to the end of November was R47m and net profit R17m. Talhado’s revenue for the next quarter to end-February was R51m and its net profit R29m.
Saban said the strategic acquisition of Talhado garnered squid fishing rights and brand and processing facilities as well enhancing the company’s footprint in the sector.
"This acquisition will lead to further synergies among the existing operations and enhance value," he said.
Overall, Premier managed to firm up margins in the traditionally quieter first six months trading period.
Premier’s revenue edged slightly higher to R185m from R183m in 2017, but gross and operating profits were up 7% and 20%, respectively, to R76m and R20m.
Saban said the company looked forward to the latter half of the financial year.
"This is where the bulk of our performance is achieved due to the seasonal nature of our business," said Saban.
Cash generated from operations before working capital changes increased 8% to R26m.
But Saban explained that significant catches during the period under review resulted in a R48m increase in the net working capital investment, causing an outflow of R22m.
A divisional review showed Premier managing increased landings and a favourable sales mix in its key south coast rock lobster operation.
The lobster segment generated R89m in revenue from R86m and contributed R18.2m in operating profit, slightly up from R17.9m.
Small pelagics suffered a marked drop in revenue to R20m from R28m and operating profits to R4.2m from R6m in 2017 — but could rebound in the second half if an improving catch rate trend for pilchards continues.