Oceana Group’s headline earnings per share (HEPS) for the 12 months ended September 30 increased by 13.5% to 917.6 cents supported by record earnings from Daybrook in the US, better margins at Lucky Star Foods, and a strong turnaround in the hake operations.
A final dividend of 300 cents (305 cents) per share lifted the total payout 13.8% for the year, to 495 cents (435 cents).
However, the company faced negative impacts during the year, including weaker results from the African fishmeal and fish oil business due to lower volumes, and poor performance in horse mackerel due to a vessel breakdown and lower rates.
Revenue from continuing operations rose 0.7% to R10.06 billion, while operating profit increased by 9.5% to R1.63bn. This growth was primarily due to strong fish oil sales prices and improved hake and squid sales volumes.
However, it was offset by lower fishmeal sales volumes resulting from reduced catches in South Africa and the US, as well as lower horse mackerel sales volumes.
Higher storage and handling costs at Lucky Star Foods resulted in sales and distribution expenditure as a percentage of revenue increasing slightly to 5.4%, up from 5.3%. Overhead expenditure also increased by 6.7% to R1.02bn, marginally above inflation, mainly due to higher insurance premiums.
Net interest expense rose to R226 million, up from R192m, primarily due to an increase in borrowings. This was a result of lower cash operating profit from the South African operations, along with higher capital expenditure and working capital investment.
Cash generated from operations fell by 13.5% to R1.46bn, while capital expenditure increased by R187m to R645m. This was driven by investments in South Africa, including R215m to modernise canneries, fishmeal and fish oil plants, and boiler infrastructure, as well as commissioning a new canned meat facility.
Additionally, R77m was spent on the Desert Diamond vessel for essential repairs and expedited dry docking costs, and R27m was allocated to expanding squid fishing capacity through the acquisition of five squid vessels.
At Lucky Star Foods, strong second-half demand resulted in total sales volumes of 9.3 million cartons, slightly below the previous year’s record of 9.6 million cartons.
Daybrook, which contributed 72% to group profit, achieved strong performance mainly through a 17.4% rise in fish oil sales volumes to 14 947 tons. This was driven by higher opening inventory levels and improved production yields, combined with a 49% increase in US dollar fish oil prices.
In hake, catch volumes increased 36.3% due to increased sea days and improved catch rates, leading to sales volumes rising by 28.9% to 10 420 tons.
The squid fishing season gained momentum in April, resulting in a 43.9% annual increase in catch rates. South Coast Rock Lobster operations maintained solid performance, while the West Coast Rock Lobster resource stabilised at low levels.
The fishmeal and fish oil businesses were expected to face headwinds due to softening global prices resulting from normalised global supply levels.
A recovery in consumer spending was anticipated to support Lucky Star Foods' growth strategy, which focuses on affordability and availability. Recent cannery upgrades are expected to yield increased throughput and cost efficiency.
BUSINESS REPORT