Lucky stars line up for big Oceana performance
Fishing conglomerate Oceana Group showed the benefits of running a tight ship — and angling in on specialist offshore niches — when it hiked the dividend for the year to end-September by a whopping 28% to 469c per share.
Financial results released on Thursday showed Oceana, one of the biggest fishing enterprises in the world, fattening its operating margin to 21% from 17% in the previous financial year.
Not only did it achieve favourable pricing for its seafood products in most markets, but CEO Francois Kuttel reported material cost efficiencies in production, logistics, warehousing and freight, as well as improved efficiencies through the finance shared services centre and the renegotiation of key contracts.
Revenue surged 34% to R8.24bn with profit after tax jumping 49% to R988m.
While cost of sales was up 32% to just more than R5bn, Oceana — which has Lucky Star canned pilchards as its flagship brand — managed to limit the increase in marketing expenditure to 17% at R599m and reduced overheads 10% to R63m. Bottom line was also helped by a net foreign exchange gain of just more than R1bn, which was 28% higher than the previous year.
Lucky Star was again the star performer for Oceana, contributing 52% of group revenue.
In addition to pilchards, Oceana also catches West Coast lobster, hake, horse mackerel and squid.
Kuttel said the 13% increase in sales volumes at Lucky Star reflected competitive pricing against other proteins, a strong marketing strategy and the introduction of new products and flavours. He said Lucky Star pilchards had maintained a market share of about 80%.
Kuttel said Oceana’s strategy of increasing imports of frozen pilchards and doubling production in its canneries in SA and Namibia had reduced foreign currency exposure and positively affected overhead recoveries. Operational cash flow was markedly higher at R1.6bn.
Oceana also benefited from a better-than-expected full-year contribution from its recently acquired US-based fishmeal and fish oil business, Daybrook.
He said Daybrook’s fishing season from April to the end of October had seen landings of 687-million Gulf menhaden fish (650-million in the 2015 season). Kuttel said the improved harvest rates indicated a robust menhaden resource.
In the period under review, Daybrook produced 50,993 tonnes of fishmeal and 27,545 tonnes of fish oil, resulting in a combined yield of 37.3% (last year: 35.5%). Daybrook’s total revenue of R1.9bn for the year was the highest in the company’s history with operating profit of R668m ahead of the returns expected by Oceana.
Kuttel said Daybrook’s increased focus on plant operations and additional output from the new driers installed in 2015 had seen a meaningful boost in output capacity.
Oceana finished 1.56% higher at R116.70 on Thursday.