Oceana's Results Pleasing in Difficult Economic Conditions

Oceana Chairman, Mustaq Brey, reported a pleasing growth in headline earnings for the financial year ended 30 September 2010.  "In a year of difficult economic conditions and the strong rand exchange rate, the Group did well to improve on our 2009 performance," he said.  "Oceana's strategy of investment in a range of industry sectors and the cold storage business has again proved its worth in producing impressive financial results.", reports www.megafishnet.com with reference to Oceana.

Headline earnings per share rose by 13% over the previous year following improved results in canned fish, horse mackerel, fishmeal, lobster, squid and cold storage.  Revenue was 4% higher and operating profit before abnormal items was 18% above last year.  Investment income declined due to lower cash balances and lower interest rates.

Commenting on inshore fishing operations, CEO Francois Kuttel said that profitability from canned fish operations was well above that achieved in the prior year.  The pilchard total allowable catch (TAC) in South Africa is the same as 2009 and landings and processing yields were in line with the previous financial year, with the company's quota being expected to be landed in full by close of season.  The Namibian TAC was higher. Etosha landed its quota in full and also canned a significant volume of frozen fish imported from Morocco.  Canned fish sales volumes increased on the domestic market as a result of the greater availability of finished products from both local supply and imports. Costs on imported product benefitted from the strong rand exchange rate.

Fishmeal margins and profits increased, with selling prices in US dollar terms significantly better than the previous year and a large proportion of sales were made to international markets, mainly in the Far East.  Catches of redeye herring were higher and overall the input into the fishmeal plants increased 17%.

Profits from lobster increased due to higher prices and lower costs.  Catch rates were substantially better, resulting in lower catching costs per unit.  Export selling prices reached record levels due to the worldwide shortage of lobster; however this was partially offset by the strong rand/dollar rate of exchange.

The squid business returned to profitability with higher turnover due to higher catches after the previous year's industry-wide strike by fishermen. 

Lower volumes of French fries, coupled with the high purchase prices of potatoes in the first quarter, resulted in a loss for this business.

In the midwater and deep-sea segment, Kuttel said that overall, profit from horse mackerel was higher than last year.  "Catch rates in Namibia were very good due to extra catch capacity.  This was achieved following upgrades to two vessels in 2009.  Vessel operating costs in Namibia and South Africa reduced due to lower fuel and maintenance costs.  Selling prices were generally higher in US dollar terms."

Hake incurred a small loss for the year due to low selling prices, the strong rand and the costs of a breakdown on one of the vessels.

Reviewing cold storage, Kuttel said, "The frozen stores achieved excellent results, with increased revenue due to higher frozen capacity, occupancy rates and pallet numbers handled.  However, lower fruit volumes detracted from the results but, overall, operating profit was higher than last year." The expansion of the City Deep facility is scheduled for commissioning in February 2011.

A final dividend of 175 cents per share was declared which, together with the interim dividend of 33 cents, brings the total dividend for the year to 208 cents per share, an increase of 13% on the 2009 total dividend of 184 cents.

Considering future prospects, Brey said, "It is expected that fishing conditions in the Southern African region should remain relatively stable. The Group's markets in South Africa and other African and Asian countries are anticipated to show further growth while the company's European markets are yet to recover to levels experienced before the global economic crisis. The rand exchange rate will continue to be a factor influencing  the group's financial performance."