Oceana Group Limited (JSE: OCE) announced strong results for the six months ended 31 March 2024. Revenue grew by 12.1% to R5.0 billion, up from R4.5 billion in the previous year. Operating profit surged by 57.1% to R1.017 billion from R647 million. Profit before tax rose 67.6%, reaching R924 million, compared to R551 million last year.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Revenue (Rm) | 5,041 | 4,498 | 12.1% |
| Operating Profit (Rm) | 1,017 | 647 | 57.1% |
| Profit Before Tax (Rm) | 924 | 551 | 67.6% |
| Earnings per Share (cents) | 587.6 | 318.6 | 84.4% |
| Headline Earnings per Share (cents) | 578.8 | 313.5 | 84.6% |
Strong Performance from Daybrook
The significant growth was driven by record earnings from US-based Daybrook. Higher inventory levels enabled higher fish oil sales volumes at record US-dollar prices. Daybrook’s fish oil sales volumes nearly doubled to 9,671 tons, up from 4,852 tons last year. Despite a 12.4% decrease in fishmeal sales volumes to 19,178 tons, fish oil pricing increased by 72%.
Canned Foods and Fishmeal in Africa
Lucky Star saw improved sales volumes in the second quarter despite challenges. Canned fish volumes declined by 3.3%, and overall canned food volumes dropped 20.8%. This was due to a canned meat shortage during the transition to in-house manufacturing. The closure of West Coast plants for upgrades also impacted production.
Segment Performance
The Canned Foods and Fishmeal (Africa) segment reported revenue of R2.547 billion, nearly unchanged from R2.546 billion last year. Operating profit for this segment increased by 13.1% to R152 million.
| Segment | Revenue (Rm) | Operating Profit (Rm) | % Change Revenue | % Change Profit |
|---|---|---|---|---|
| Canned Foods and Fishmeal (Africa) | 2,547 | 152 | 0.1% | 13.1% |
| Fishmeal and Fish Oil (USA) | 1,734 | 848 | 69.4% | 129.2% |
| Wild Caught Seafood | 760 | 17 | -18.1% | -84.2% |
Wild Caught Seafood Challenges
The Wild Caught Seafood segment faced difficulties, with revenue dropping by 18.1% to R760 million. Operating profit plummeted by 84.2% to R17 million. Issues included a major vessel breakdown and reduced catch rates.
Cash Flow and Financial Position
Cash generated from operations increased by 12.6% to R634 million. Capital expenditure rose by 44.9% to R297 million, including significant investments in plant upgrades. Net debt decreased by 16.7% to R2.461 billion, improving the net debt to EBITDA ratio to 1.2 times from 1.6 times.
Dividend Declaration
Oceana declared an interim dividend of 195 cents per share, up 50% from 130 cents per share last year. This will result in a net dividend of 156 cents per share after the 20% withholding tax.
Events Post Reporting Date
Lucky Star acquired a 75% stake in a canned chicken liver business. This business supplies the Department of Basic Education in Eastern Cape and Gauteng. Oceana also acquired a 51% stake in a squid business, owning 5 vessels and 77 fishing licenses.
Outlook
Oceana remains optimistic for the second half of 2024. Key drivers include increased local production, cost management, and higher canned meat sales volumes. The total allowable catch for pilchards in South Africa increased by 67% to 65,000 tons. Oceana’s quota for pilchards is 20,136 tons, expected to enhance margins.
Both SA fishmeal facilities are operational for the peak fishing period. In the US, fish oil yields have been good despite early season weather challenges. Daybrook has contracted a portion of its 2024 fish oil production at favorable prices.