Oceana Group Limited · JSE:OCE
Oceana — H1 2020 Earnings Presentation
49 slides from Oceana's earnings presentation, June 2020
Slide 1: Investor Presentation 2020, Period Ended 31 March 2020
INVESTOR 2020 PRESENTATION PERIOD ENDED 31 MARCH 2020 POSITIVELY IMPACTING LIVES 1
Slide 2: Legal Disclaimer and Basis of Preparation
LEGAL DISCLAIMER AND BASIS OF PREPARATION • For the purposes of this notice, the presentation (the “Presentation”) shall mean and include the slides that follow, the oral presentation of the slides by Oceana Group Limited (the “Company”) and/or its advisers, any question- and-answer session that fol
Slide 3: Introduction Overview
INTRODUCTION COVID-19 PERFORMANCE FINANCIAL OPERATIONAL STRATEGIC OVERVIEW PERFORMANCE REVIEW OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 3
Slide 4: Our Core Purpose
OUR CORE PURPOSE OUR CORE PURPOSE IS TO BE A LEADING GLOBAL FISH COMPANY CREATING SUSTAINABLE VALUE AND POSITIVELY IMPACTING THE LIVES OF ALL OUR STAKEHOLDERS POSITIVELY IMPACTING LIVES 4
Slide 5: Diversified Operations
DIVERSIFIED OPERATIONS 6 Fishing geographies EUROPE 14% NORTH FAR EAST AMERICA 5% 25% 46 Customer REST OF geographies AFRICA 22% EARNINGS PER REGION SA AUSTRALIA 32% 2% 20 VESSELS 12 VESSELS & PLANES 23 VESSELS 8 COLD STORAGE FACILITIES 6 PRODUCTION FACILITIES 1 PRODUCTION FACILITY 6 PRODUCTION FACI
Slide 6: Diversified Earnings
DIVERSIFIED EARNINGS 3 YEAR AVERAGE EARNINGS REGION CURRENCY SPECIES 7% 7% 14% 32% 33% 25% 24% 43% 43% 14% 22% 35% Canned fish South Africa Rest of Africa Rand USD Euro Fishmeal and oil Europe North America Other Horse mackerel and hake Other POSITIVELY IMPACTING LIVES 6
Slide 7: COVID-19 Overview
INTRODUCTION COVID-19 PERFORMANCE FINANCIAL OPERATIONAL STRATEGIC OVERVIEW PERFORMANCE REVIEW OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 7
Slide 8: COVID-19
COVID-19 Business continuity • Fishing, cold storage services and US pet food deemed essential services across all our operations • Most of our products sold for in-home consumption, which has been largely unaffected by lockdown regulations • Scale of fleet and production sites offer mitigation to d
Slide 9: COVID-19 Decision-Making Timeline
COVID-19 DECISION-MAKING TIMELINE Vessel fleet screening rolled out to Masks skippers distributed to Wellness sites initiative for employees DoL approves Virtual New Orleans COVID-19 meetings work from home protocols at St International commence Private transport Helena Bay and travel for employees
Slide 10: Positively Impacting Lives
POSITIVELY IMPACTING LIVES POSITIVELY IMPACTING LIVES 10
Slide 11: Performance Overview
INTRODUCTION COVID-19 PERFORMANCE FINANCIAL OPERATIONAL STRATEGIC OVERVIEW PERFORMANCE REVIEW OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 11
Slide 12: 2020 H1 Performance Highlights
2020 H1 PERFORMANCE HIGHLIGHTS Africa Canned fish FMO (US) $/TON FMO (AFRICA) 18% Volumes 1% meal 47% entrenched 17% oil OPERATING PROFIT SALES PRICE SAVING IN FIXED COSTS Horse mackerel Hake CCS Lobster and squid 4% 6% Euro pricing Decrease in size mix 11% Volumes materially lower b
Slide 13: Financial Review
INTRODUCTION COVID-19 PERFORMANCE FINANCIAL OPERATIONAL STRATEGIC OVERVIEW PERFORMANCE REVIEW OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 13
Slide 14: Results Snapshot
RESULTS SNAPSHOT 1. Revenue increase driven by improved canned fish, fish R’000 H1 2020 H1 2019 VAR oil and horse mackerel pricing, improved cold storage Revenue 1. 3 626 514 3 557 416 2% occupancy levels and weaker Rand. Gross Profit 1 305 194 1 319 207 -1% 2. Margin lower due to impact of weaker R
Slide 15: HEPS
HEPS REPORTED HEPS HEPS EXCLUDING WITHHOLDING TAX* 260,9 249,7 249,8 249,7 0% 4,3% H1 2019 H1 2020 H1 2019 H1 2020 *HEPS excludes the incremental withholding tax on intergroup foreign dividends received in H1 POSITIVELY IMPACTING LIVES 15
Slide 16: Revenue
REVENUE 3 800 24 24 17 17 3 600 69 3 400 3 626 3 626 3 626 3 627 3 627 3 557 3 557 3 200 3 000 Mar-19 Canned fish FMO (Africa) FMO (US) Horse mackerel, hake, Commercial cold Mar-20 lobster & squid storage Increase Decrease POSITIVELY IMPACTING LIVES 16
Slide 17: Operating Profit
OPERATING PROFIT 650 600 18 17 27 17 25 550 500 605 580 587 570 570 554 554 450 400 Mar-19 Canned fish FMO (Africa) FMO (US) Horse mackerel, hake, Commercial cold Mar-20 lobster & squid storage Increase Decrease POSITIVELY IMPACTING LIVES 17
Slide 18: Financial Position – Key Items
FINANCIAL POSITION – KEY ITEMS 1. Replacement capex of R158m included R’000 H1 2020 H1 2019 VAR FY 2019 in H1 plus right-of -use assets of Property, plant & equipment 1. 2 116 276 1 638 926 29% 1 697 221 R163m in terms of IFRS16 : Leases Intangible assets 5 666 856 4 691 433 21% 4 886 609 adoption O
Slide 19: Balance Sheet Strength
BALANCE SHEET STRENGTH H1 2020 H1 2019 VAR AFRICA R’000 1. Continue with strategy to degear SA balance Net debt 1. 1 853 967 2 146 166 -14% sheet given higher interest cost. Resulted in Net debt/EBITDA 1,9x 2,2x -13% improved leverage ratio. Unutilised committed facilities 3. 458 000 2. Net debt in
Slide 20: Cash Flow
CASH FLOW CASH FLOW (R'M) 1 400 49 1 200 464 1 000 732 800 157 600 415 400 588 90 200 325 - Sep-19 Cash operating Working capital Tax & dividends Capex Debt serviced Other Mar-20 profit changes paid Increase Decrease POSITIVELY IMPACTING LIVES 20
Slide 21: Key Financial Matters Impacting H2
KEY FINANCIAL MATTERS IMPACTING H2 • Revenue more USD weighted in H2 given seasonaility of fishmeal businesses. USD canned fish imports more weighted to H1. Weaker Rand 46% will benefit H2 earnings. 45% • 67% of SA debt remains unhedged. Net interest will benefit from 275 basis point reduction in SA
Slide 22: Operational Overview
INTRODUCTION COVID-19 PERFORMANCE FINANCIAL OPERATIONAL STRATEGIC OVERVIEW PERFORMANCE REVIEW OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 22
Slide 23: Canned Fish
Canned Fish POSITIVELY IMPACTING LIVES 23
Slide 24: Canned Fish - H1 Performance
CANNED FISH - H1 PERFORMANCE KEY PERFORMANCE INDICATORS H1 PERFORMANCE 2019 2020 • Strong demand continued into H1 off the back March March of good volumes in PY, demand service level at Revenue 14% 4% 96% % VAR • PI implemented in December 2019 Volumes sold Canned pilchards 11% 1% • Canning facilit
Slide 25: Canned Fish - Demand
CANNED FISH - DEMAND • Affordability, availability and versatility strategy continues to pay dividends • 5.5% volume growth in till sales (Nielsen) • Brand strength - PI tested pricing levels above R20/can, volumes unaffected • Our products are attractive in tough economic environment, with longer s
Slide 26: Canned Fish Supply
CANNED FISH SUPPLY • Ability to shift-change production between local and foreign canneries • Allows improved management of business continuity, exchange rate and working capital risks CARTONS ‘000 11 000 10 000 2% 2% 9 000 12% 8 000 47% 7 000 40% 56% 6 000 5 000 4 000 3 000 48% 51% 2 000 43% 1 000
Slide 27: Canned and Frozen Fish Inventories
CANNED AND FROZEN FISH INVENTORIES • New normal established in 2019, strong procurement in H1 resulting in 6 months inventory holding • Enables maintaining service levels during COVID-19 crisis, in the event of disruption to production CARTONS ‘000 6 000 5 000 20% 20% 16% 4 000 34% 33% 28% 3 000 2 0
Slide 28: Canned Fish - Outlook
CANNED FISH - OUTLOOK April and May trading update: PRODUCTION SALES VOLUMES DEMAND SERVICE LEVELS 20% 3% to 96% IMPORTED COST Inventory level Chakalaka launched 1% 6 months Positive market response Outlook June to September: TAILWINDS HEADWINDS • Sufficient stock on hand to service 6 months
Slide 29: New Product Innovation
NEW PRODUCT INNOVATION POSITIVELY IMPACTING LIVES 29
Slide 30: Fishmeal and Fish Oil
Fishmeal and Fish Oil POSITIVELY IMPACTING LIVES 30
Slide 31: Fishmeal and Fish Oil (Africa) - H1 Performance
FISHMEAL AND FISH OIL (AFRICA) - H1 PERFORMANCE KEY PERFORMANCE INDICATORS H1 PERFORMANCE 2019 2020 • Slow start to the fishing season with good March March landings achieved in March Revenue % VAR 38% 14% • Improved pricing due to Peru season ending prematurely Fishmeal price USD/MT 2% 1% • Benefit
Slide 32: Anchovy and Pilchard Catches
ANCHOVY AND PILCHARD CATCHES INDUSTRY ANCHOVY CATCH INDUSTRY PILCHARD TAC 300 000 70 000 60 000 250 000 50 000 200 000 40 000 150 000 30 000 100 000 20 000 50 000 10 000 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 YTD to end May 2016 2017 2018 2019 2020 YTD to end
Slide 33: Fishmeal and Fish Oil (US) - H1 Performance
FISHMEAL AND FISH OIL (US) - H1 PERFORMANCE KEY PERFORMANCE INDICATORS H1 PERFORMANCE 2019 2020 • Lower opening stock levels impact sales volumes March March • Strong demand for pet food with record sales Revenue recorded in March % VAR 7% 4% • Improved pricing, especially fish oil which Volume sold
Slide 34: Fishmeal and Fish Oil Global Outlook – Supply 2020
FISHMEAL AND FISH OIL GLOBAL OUTLOOK – SUPPLY 2020 WORLD FISHMEAL PRODUCTION ('000MT) Fishmeal 6 000 Peru 5 000 • 1st season quota of 2.4 million MT (PY:2.6 million MT) 4 000 • Delayed start due to state of emergency extended (3rd time) to May 13th 3 000 • Lower performance expected due to the COVID
Slide 35: FMO - Outlook
FMO - OUTLOOK April and May trading update: SALES VOLUME (US) LANDINGS (US) OIL YIELD IMPROVEMENT (US) OIL PRICE (USD/MT) 8% 22% 25% From 8% to 10% 15% SALES VOLUME (AFRICA) LANDINGS (AFRICA) PILCHARD LANDINGS MEAL PRICE (USD/MT) 20% 32% 2 800 tons 2% Outlook June to September: TAILW
Slide 36: Blue Continent Products
Blue Continent Products POSITIVELY IMPACTING LIVES 36
Slide 37: Horse Mackerel - H1 Performance
HORSE MACKEREL - H1 PERFORMANCE KEY PERFORMANCE INDICATORS H1 PERFORMANCE 2019 2020 • Volumes driven by continued improvement in SA March March resource, offset by reduced catch rates in Revenue Namibia % VAR 2% 4% • Demand in traditional African markets remains Volume sold strong tons 14% 4% • Nami
Slide 38: Horse Mackerel - Outlook
HORSE MACKEREL - OUTLOOK April and May trading update: CATCH RATES VOLUMES TRADED SALES PRICE ($/TON) NET REALISED SALES PRICE (R/TON) 15% 0.2% 7% 8% Outlook June to September: TAILWINDS HEADWINDS • Transhipments mitigate COVID-19 logistic • Higher risk of COVID-19 infection affecting delays
Slide 39: Hake - H1 Performance
HAKE - H1 PERFORMANCE KEY PERFORMANCE INDICATORS H1 PERFORMANCE 2019 2020 • Strong demand experienced from Europe’s in- March March home consumption market Revenue % VAR 2% 4% • Euro pricing improved, offset by smaller sized fish traditionally targeted for local market Landings tons 8% 1% • Fuel pri
Slide 40: Hake - Outlook
HAKE - OUTLOOK April and May trading update: CATCH RATES LANDINGS EURO PRICING (EUR/KG) ZAR PRICING (R/KG) 4% 6% 12% 7% Outlook June to September: TAILWINDS HEADWINDS • Lower fuel price • Persistence of smaller size mix may impact • More favourable exchange rate pricing • Higher European dem
Slide 41: Lobster and Squid – H1 Performance
LOBSTER AND SQUID – H1 PERFORMANCE KEY PERFORMANCE INDICATORS H1 PERFORMANCE 2019 2020 • Demand for lobster dropped following Hong March March Kong protests and lockdown of China Lobster landings tons 33% 34% • Given drop in demand for live sales, strategic decision to switch to frozen lobster sales
Slide 42: Lobster and Squid - Outlook
LOBSTER AND SQUID - OUTLOOK April and May trading update: LOBSTER VOLUMES SQUID VOLUMES LOBSTER PRICING US$/KG SQUID PRICING EUR/KG 28% 18% 20% 13% Outlook June to September: TAILWINDS HEADWINDS • Chinese live lobster market re-opens • Lobster pricing impacted by lower demand • Strong demand
Slide 43: Commercial Cold Storage
Commercial Cold Storage POSITIVELY IMPACTING LIVES 43
Slide 44: CCS – H1 Performance
CCS – H1 PERFORMANCE KEY PERFORMANCE INDICATORS H1 PERFORMANCE 2019 2020 • Coastal stores continue to perform well with March March Western Cape seen as key enabler to Lucky Star Revenue Strategy % VAR 4% 3% • Improvement in Gauteng – key contracts Occupancy levels renewed % 12% 11% • Cost savings a
Slide 45: CCS - Outlook
CCS- OUTLOOK April and May trading update: REVENUE PER PALLET OCCUPANCIES COST PER PALLET 9% 5% 6% Outlook June to September: TAILWINDS HEADWINDS • Higher fish volumes • QSR customers impacted by COVID-19 • High customer service levels • Reduction in handling charges due to lower throughput PO
Slide 46: Strategic Overview & Outlook
INTRODUCTION COVID-19 PERFORMANCE FINANCIAL OPERATIONAL STRATEGIC OVERVIEW PERFORMANCE REVIEW OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 46
Slide 47: Strategic Overview and Prospects
STRATEGIC OVERVIEW AND PROSPECTS Navigate COVID-19 • Minimise impact on operations from Western Cape infections • Balance sheet strength and diverse operations reduce risk • Healthy, safety and business continuity protocols in place • Strong industry and government collaboration Fishing rights • SA
Slide 48: Prospects
PROSPECTS • April / May trading positive compared to comparative prior period • Rand weakness will bolster export revenues & Daybrook earnings, constrain canned fish margins • In-home fish protein consumption expected to continue • COVID-19 impact on production, supply chain and consumer disposable
Slide 49: Positively Impacting Lives
POSITIVELY IMPACTING LIVES 49