Oceana Group Limited · JSE:OCE
Oceana — H1 2017 Earnings Presentation
70 slides from Oceana's earnings presentation, June 2017
Slide 1: Interim Results Presentation
OCEANA GROUP LIMITED Interim Results Presentation FOR THE SIX MONTHS ENDED MARCH 2017
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 foll
Slide 3: Agenda
AGENDA GROUP FINANCIAL & STRATEGIC GUIDANCE OVERVIEW OPERATING OVERVIEW & PERFORMANCE GUIDANCE
Slide 4: Group Overview
GROUP OVERVIEW 9 4 8 3 5 steel refrigerated steel refrigerated vessels, wholly owned, canneries fishmeal plants seawater vessels in seawater vessels co-owned or joint South Africa in Namibia ventures 1 11 13 production facility fishing vessels spotter planes 1 2 5 1 2 horse mackerel horse mackerel h
Slide 5: Group Overview - Increased Diversification
GROUP OVERVIEW - INCREASED DIVERSIFICATION BY SECTOR BY GEOGRAPHY 6% 20% 2% H1:2017 Outer circle 6% 10% H1:2016 Middle circle 19% 2% H1:2015 Inner circle 6% 12% 7% 8% 7% 9% 4% 7% 8% 6% 42% 9% 46% 6% 55% 17% 12% 7% 7% 77% 61% 55% 26% 6% 34% CANNED FISH SOUTH AFRICA AND NAMIBIA FISHMEAL & FISH OIL OTH
Slide 6: Group Overview - Challenging 6 Months
GROUP OVERVIEW - CHALLENGING 6 MONTHS FISHMEAL PRICE STRENGTHENING RAND 1,800 18.00 1,700 17.00 1,600 16.00 1,500 1,400 15.00 1,300 14.00 1,200 13.00 1,100 1,000 12.00 2017 2016 2017 2016 CPI 103 102 101 100 99 98 97 96 Jun-16 Feb-17 Mar-17 Jul-16 Sep-16 Dec-16 Apr-16 May-16 Aug-16 Oct-16 Nov-16 Jan
Slide 7: Forex - Cover and Gains/Losses
13.50 14.00 14.50 15.00 Oct-15 15.50 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 FEC RATE Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 R’M - -60 -40 -20 20 40 60 80 2012 2013 FOREX - COVER AND GAINS/LOSSES H1 2014 2015 H2 2016 2017
Slide 8: Agenda
AGENDA GROUP FINANCIAL & STRATEGIC GUIDANCE OVERVIEW OPERATING OVERVIEW & PERFORMANCE GUIDANCE
Slide 9: Financial & Operating Performance
FINANCIAL & OPERATING PERFORMANCE HEADWINDS • Exchange rate • Lucky Star volumes • Fishmeal pricing • CCS Gauteng occupancy • Hake sea days TAILWINDS • Fishmeal volumes • Horse mackerel SA volumes • Procurement efficiencies • GP margin improvement • Daybrook earnings • Working capital management
Slide 10: Income Statement - Group
INCOME STATEMENT - GROUP MAR MAR R'000 2017 Var 2016(*) Revenue 3,140,602 -9% 3,465,047 Cost of sales 1,918,812 13% 2,208,217 Gross profit 1,221,790 -3% 1,256,830 GP margin 39% 36% Operating profit before foreign exchange gain/(loss) 560,211 4% 558,111 Foreign exchange (loss)/gain (44,677) 69,909 Sh
Slide 11: Income Statement – Africa Operations
INCOME STATEMENT – AFRICA OPERATIONS MAR MAR R'000 2017 Var 2016(*) Revenue 2,435,868 -12% 2,759,365 Cost of sales 1,534,802 14% 1,793,789 Gross profit 901,066 -7% 965,576 GP margin 37% 35% Operating profit before foreign exchange gain/(loss) 352,585 -4% 367,309 Foreign exchange (loss)/gain (44,677)
Slide 12: Income Statement – Daybrook
INCOME STATEMENT – DAYBROOK MAR MAR $'000 2017 Var 2016 Revenue 51,825 12% 46,452 Cost of sales 28,226 3% 27,335 Gross profit 23,599 23% 19,117 GP margin 46% 41% Operating profit 15,365 23% 12,461 Operating profit margin 30% 27%
Slide 13: Revenue Bridge
2,500 2,700 2,900 3,100 3,300 3,500 3,700 March 2016 3,465 REVENUE Canned fish and fishmeal 172 (Africa) Fishmeal and 93 fish oil (USA) Horse mackerel and 21 hake Lobster and 5 squid Commercial cold storage 16 logistics Pre-exchange rate 3,354 Increase Exchange rate 214 March 2017 3,141 Decrease
Slide 14: Operating Profit
OPERATING PROFIT Revenue Drivers Cost Drivers Exchange March 2016 Volumes Price Other March 2017 rate TOTAL 628,020 33% 8% 5% 9% 515,534
Slide 15: Canned Fish and Fishmeal
CANNED FISH AND FISHMEAL Exchange March 2016 Volumes Price Other March 2017 rate Canned fish 40% 28% 10% 5% (Africa) 211,115 126,486 Fishmeal (Africa) 10% 20% 9% 10%
Slide 16: Canned Fish and Fishmeal
CANNED FISH AND FISHMEAL Exchange March 2016 Volumes Price Other March 2017 rate Canned fish 40% 28% 10% 5% (Africa) 211,115 126,486 Fishmeal (Africa) 10% 20% 9% 10% EXCHANGE RATE 17.00 16.50 16.00 15.50 15.00 14.50 14.00 13.50 13.00 12.50 Dec-15 Feb-16 Mar-16 Jun-16 Sep-16 Dec-16 Feb-17 Mar-17 Oct-
Slide 17: Canned Fish and Fishmeal
CANNED FISH AND FISHMEAL Exchange March 2016 Volumes Price Other March 2017 rate Canned fish 40% 28% 10% 5% (Africa) 211,115 126,486 Fishmeal (Africa) 10% 20% 9% 10% CANNED FISH SALES VOLUMES SA (CARTONS) SALES VOLUMES RSA & BLNS Sep Oct Nov Dec Jan Feb Mar F2012 F2013 F2014 F2015 F2016 F2017 Oct ‐
Slide 18: Canned Fish and Fishmeal
CANNED FISH AND FISHMEAL Exchange March 2016 Volumes Price Other March 2017 rate Canned fish 40% 28% 10% 5% (Africa) 211,115 126,486 Fishmeal (Africa) 10% 20% 9% 10% CANNED FISH SALES VOLUMES - REST OF AFRICA (CARTONS) 437 488 9.2% 16.5% 400 746 344 019 Mar-15 Mar-16 Mar-17 BLNS ROA
Slide 19: Canned Fish and Fishmeal
CANNED FISH AND FISHMEAL Exchange March 2016 Volumes Price Other March 2017 rate Canned fish 40% 28% 10% 5% (Africa) 211,115 126,486 Fishmeal (Africa) 10% 20% 9% 10% TONS MAR 2017 MAR 2016 Landings 63,972 35,711 Meal yield 23.1% 23.0% Oil yield 7.5% 3.3% Sales - fishmeal 16,649 9,687 Sales - fish oi
Slide 20: Canned Fish and Fishmeal
CANNED FISH AND FISHMEAL Exchange March 2016 Volumes Price Other March 2017 rate Canned fish 40% 28% 10% 5% (Africa) 211,115 126,486 Fishmeal (Africa) 10% 20% 9% 10% AFRICA FISHMEAL AND FISH OIL PRICING COMPARISON 2,500 2,000 PRICE /TON 1,500 1,000 500 - Feb-16 Mar-16 Jun-16 Feb-17 Mar-17 Oct-15 Nov
Slide 21: Daybrook
DAYBROOK Exchange March 2016 Volumes Price Other March 2017 rate Fishmeal and fish 195,164 12% 13% 2% 5% 216,298 oil (USA) US SALES VOLUMES 35,000 30,000 10,304 25,000 6,373 20,000 15,000 10,000 21,437 21,120 5,000 - Mar-16 Mar-17 FISHMEAL FISH OIL
Slide 22: Daybrook
DAYBROOK Exchange March 2016 Volumes Price Other March 2017 rate Fishmeal and fish 195,164 12% 13% 2% 5% 216,298 oil (USA) US FISHMEAL & FISH OIL PRICE COMPARISON 2,500 2,000 1,500 PRICE M/T 1,000 500 - Oct-15 Nov-15 Dec-15 Jul-16 Feb-16 Mar-16 Jun-16 Sep-16 Oct-16 Nov-16 Dec-16 Feb-17 Mar-17 Jan-16
Slide 23: Horse Mackerel & Hake
HORSE MACKEREL & HAKE Exchange March 2016 Volumes Price Other March 2017 rate Horse mackerel 7% 18% 16% 2% 122,867 104,252 Hake 12% 10% 13% 12% DESERT DIAMOND LANDINGS NAMIBIA CATCH RATES Dec-15 Feb-16 Sep-16 Mar-16 Jun-16 Dec-16 Feb-17 Mar-17 Oct-15 Nov-15 Jul-16 Oct-16 Nov-16 Jan-16 Apr-16 May-16
Slide 24: Horse Mackerel & Hake
HORSE MACKEREL & HAKE Exchange March 2016 Volumes Price Other March 2017 rate Horse mackerel 7% 18% 16% 2% 122,867 104,252 Hake 12% 10% 13% 12% HORSE MACKEREL NAMIBIA AVE EX HATCH PRICE (US$/ton) 1,060 960 860 850 750 861 730 640 651 620 490 564 Feb-16 Mar-16 Jun-16 Feb-17 Mar-17 Sep-15 Oct-15 Nov-1
Slide 25: Horse Mackerel & Hake
HORSE MACKEREL & HAKE Exchange March 2016 Volumes Price Other March 2017 rate Horse mackerel 7% 18% 16% 2% 122,867 104,252 Hake 12% 10% 13% 12% HORSE MACKEREL QUOTA USAGE & USAGE FEE 40,000 10% 35,000 5% 30,000 4% 0% 25,000 0% 20,000 -5% TONS 15,000 -10% 10,000 -15% 5,000 -15% - -20% Mar-15 Mar-16 M
Slide 26: Horse Mackerel & Hake
HORSE MACKEREL & HAKE Exchange March 2016 Volumes Price Other March 2017 rate Horse mackerel 7% 18% 16% 2% 122,867 104,252 Hake 12% 10% 13% 12% VESSEL UTILISATION HAKE SEA DAYS 200 180 160 140 120 100 67% 80 64% 60 40 20 0 MAR 16 MAR 17 Oct Nov Dec Jan Feb Mar H1 2016 2017
Slide 27: Lobster & Squid
LOBSTER & SQUID Exchange March 2016 Volumes Price Other March 2017 rate Lobster 13% 34% 4% 1% 26,178 20,250 Squid 16% 77% 20%
Slide 28: Commercial Cold Storage
COMMERCIAL COLD STORAGE Exchange March 2016 Volumes Price Other March 2017 rate Commercial Cold 72,696 19% 10% 10% 48,246 Storage OPERATING PROFIT 13 207 18 780 7 537 Mar-16 Frozen Fish Inland Coastal Mar-17
Slide 29: Balance Sheet (Key Items)
BALANCE SHEET (KEY ITEMS) MAR MAR R'000 2017 2016 Property, plant and equipment 1,616,962 1,598,397 Intangible assets 4,448,917 4,709,566 Current assets 2,749,868 2,994,741 Other assets 448,370 511,536 Net cash 983,467 561,030 Total assets 10,247,584 10,375,270 Shareholders interest 3,518,536 3,671,
Slide 30: Net Debt
NET DEBT 4,500,000 3.0 2.8 4,000,000 2.5 3,500,000 3,000,000 2.0 1.9 2,500,000 1.5 2,000,000 1,500,000 1.0 1,000,000 0.5 500,000 - - Mar-16 Mar-17 CURRENT PORTION OF NET DEBT OCT-MAR LONG TERM DEBT
Slide 31: Working Capital
WORKING CAPITAL 140 130 120 124 125 122 100 120 80 115 60 110 110 115 112 115 40 105 44 49 20 42 43 100 32 33 0 95 2015 2016 2017 INVENTORY DAYS DEBTORS DAYS CREDITORS DAYS CASH CONVERSION CYCLE
Slide 32: Dividend Per Share
DIVIDEND PER SHARE MAR MAR 2017 Var 2016 Headline earnings (R’000) 226,019 -16% 269,129 Weighted average number of shares used in the calculation of basic earnings per share 116,647 116,617 Headline earnings per share 193.8 -16% 230.8 Total Interim dividend paid 105,035 -20% 130,622 Number of shares
Slide 33: Agenda
AGENDA GROUP FINANCIAL & STRATEGIC GUIDANCE OVERVIEW OPERATING OVERVIEW & PERFORMANCE GUIDANCE
Slide 34: Canned Fish
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Slide 35: Canned Fish Sales – South Africa
CANNED FISH SALES – SOUTH AFRICA • South Africa o Looking to improve on 2016 H2 volumes o Pricing strategy reviewed o Already seeing good traction – April record sales, May improved o Cost base reduced – Imported inventory at R13.61 – Consist $ pricing of frozen fish and cans – Procurement efficienc
Slide 36: Canned Fish Sales – South Africa
CANNED FISH SALES – SOUTH AFRICA 1,600,000 10,000,000 9,000,000 1,400,000 8,000,000 1,200,000 7,000,000 1,000,000 6,000,000 800,000 5,000,000 4,000,000 600,000 3,000,000 400,000 2,000,000 200,000 1,000,000 0 - Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2017 Monthly 2016 Monthly 2017 Cumulative
Slide 37: Canned Fish Sales – Rest of Africa
CANNED FISH SALES – REST OF AFRICA • ROA showing good growth particularly Mozambique and Zambia • Continue to explore Nigeria and Kenya opportunities
Slide 38: Canned Fish Supply
CANNED FISH SUPPLY 100% • TAC reduced from 65,000 tons to 24,000 tons 90% 22% 26% 80% 43% • Cost of local production impacted 70% 5% 3% materially 60% • Frozen fish strategy yielding rewards 50% 4% 34% • Import levels expected to double 40% 15% 63% • Revised procurement plan has 30% enabled improved
Slide 39: Fishmeal & Oil
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Slide 40: Fishmeal and Oil Global Outlook
FISHMEAL AND OIL GLOBAL OUTLOOK • Peru o 3 years of increased temperature and variable salinity o normal quotas in 2017, aided by aggressive approach from government • Oil yields expected to decrease in USA, Chile, Scandinavia • Rest of the world – meal and oil production consistent
Slide 41: Fishmeal Supply
FISHMEAL SUPPLY FISHMEAL WORLD PRODUCTION (‘000mt) 4,993 5,081 4,750 4,555 4,410 2013 2014 2015 2016 2017 PERU SCANDINAVIA* THAILAND CHINA,PR VIETNAM U.S.A CHILE JAPAN OTHERS
Slide 42: Fish Oil Supply
FISH OIL SUPPLY FISH OIL WORLD PRODUCTION (‘000mt) 954 941 947 906 877 2013 2014 2015 2016 2017 U.S.A SCANDINAVIA* CHILE CHINA,PR PERU OTHER
Slide 43: Supply - % of Biomass Harvested
SUPPLY - % of biomass harvested 40 35 30 25 20 15 10 5 0 2010 2011 2012 2013 2014 2015 2016 2017 Gulf Menhaden SA Anchovy Peru
Slide 44: Fishmeal and Oil Global Outlook
FISHMEAL AND OIL GLOBAL OUTLOOK MEAL CONSUMPTION • Growth expected in shrimp, marine and chicken sector • Offset by inclusion rates OIL CONSUMPTION • Supplements market static – past 5 years • Salmon inclusion rates declined
Slide 45: Demand/Usage – Fishmeal
DEMAND/USAGE – FISHMEAL FISHMEAL - SECTOR FISHMEAL - GEOGRAPHY Other Chicken 2% 6% China 31% Crustaceans 22% Marine fish, 13% Other 70% Asia Europe Pig 22% Salmon, 10% 17% 29% Tilapia, 8% Other Latin 10% America Former 12% Russia 2% Africa 3% Oceania Middle 1% North East America 2% 3%
Slide 46: Demand/Usage – Fish Oil
DEMAND/USAGE – FISH OIL FISH OIL - SECTOR FISH OIL - GEOGRAPHY Crustaceans 4% Europe Marine fish China 34% 16% 13% DHC 23% Aquaculture 69% Salmon 40% Asia 18% Latin Other America 8% Tilapia 5% 19% North America Africa 8% 2% Oceania Middle East 2% 3%
Slide 47: Peru Prices & Quota
$ FOB 500 1,000 1,500 2,000 2,500 3,000 0 Q1: 2012 Q2: 2012 Q3: 2012 Q4: 2012 Q1: 2013 Q2: 2013 Q3: 2013 N/C ANCHOVY QUOTA Q4: 2013 Q1: 2014 Q2: 2014 PERU PRICES & QUOTA Q3: 2014 Q4: 2014 SUPER PRIME Q1: 2015 Q2: 2015 Q3: 2015 FAQ Q4: 2015 Q1: 2016 Q2: 2016 Q3: 2016 Q4: 2016 AQUA FISH OIL Q1: 2017 0
Slide 48: Fishmeal & Fish Oil Prices
PRICE M/T PRICE /TON 500 700 900 1,100 1,300 1,500 1,700 1,900 2,100 500 700 900 1,100 1,300 1,500 1,700 1,900 2,100 Oct-15 Oct-15 Nov-15 Nov-15 Dec-15 Dec-15 Jan-16 Jan-16 Feb-16 Feb-16 Mar-16 Mar-16 Apr-16 Apr-16 May-16 May-16 Jun-16 Jun-16 Fishmeal USA Jul-16 Jul-16 AFRICA Aug-16 Aug-16 Sep-16 Se
Slide 49: Outlook
OUTLOOK Short term to medium term • Market will expect Peru to land it’s quota • Meal prices appear to have bottomed out and gradual improvement is expected • Oil price dependent on EPA/DHA levels in Peru • 2017/2018 El-Nino event – 50% probable Long term • Peru juvenile landings increasing • Meal d
Slide 50: Africa Industrial Fish Landings
AFRICA INDUSTRIAL FISH LANDINGS 148,523 127,152 125,642 86,324 • Landings positive • Biomass remains in healthy state • Angola and SA oil yield promising Oct - Mar Apr May Jun Jul Aug Sep 2014 2015 2016 2017 YTD
Slide 51: Daybrook
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Slide 52: Daybrook Performance
DAYBROOK PERFORMANCE • Season commenced mid April – plant and fleet in good state of readiness • Appointment of new plant manager • State of resource healthier than originally anticipated • Early landings positive, oil yield lower than average • No additional vessels required due to improved fleet d
Slide 53: Fish Supply – Landings
FISH SUPPLY – landings 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1 2 3 4 5 6 2014 2015 2016 2017
Slide 54: Horse Mackerel
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Slide 55: Horse Mackerel – South Africa
HORSE MACKEREL – SOUTH AFRICA • Fishing rights application process (FRAP) o Current allocation is 24,8% of PMCL from 34,7% previously o DAFF currently reviewing FRAP appeals o Announcement expected in the next few months o Judgement in Viking Fishing court case could provide clarity on future alloca
Slide 56: Horse Mackerel - South Africa
HORSE MACKEREL - SOUTH AFRICA
Slide 57: Horse Mackerel - Namibia
HORSE MACKEREL - NAMIBIA • Appointment of local MD 90,000 16% 18% • Initial allocation of 140,000 tons 80,000 16% • Date of announcement of additional 70,000 14% allocation uncertain. Expected in 60,000 12% May due to quota close to being fully 50,000 10% TONS harvested 40,000 8% • Continue to seek
Slide 58: Hake
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Slide 59: Hake Quota, Vessels and Catch Rate
HAKE QUOTA, VESSELS AND CATCH RATE • Vessel outages impacted sea 18,000 16 days - drive to improve 16,000 12.9 14 vessel utilisation in H2 14,000 10.9 10.9 12 • Beatrice factory upgrade 12,000 10 yielding positive results 10,000 8 • Euro pricing expected to 8,000 remain positive 7 6 6,000 6 6 4 4,00
Slide 60: Lobster & Squid
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Slide 61: Lobster & Squid
LOBSTER & SQUID LOBSTER • Provisional FRAP announcement expected in May • Continued engagement with DAFF on Small Scale Fisheries sector • Additional vessels contracted - expect landings to improve in H2 • Pricing remains a challenge SQUID • Positive outlook continues – volumes and pricing favourabl
Slide 62: CCS
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Slide 63: Commercial Cold Storage
COMMERCIAL COLD STORAGE • High occupancy base set in 2016 – difficult to replicate • Frozen fish storage levels will improve in H2 • Gauteng o Midrand stores under pressure due to competitive local environment o City Deep facility undergone improvements o Management will focus on pricing and long te
Slide 64: Outlook
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Slide 65: Outlook - H2 in Summary
OUTLOOK - H2 IN SUMMARY HEADWINDS • Exchange rate • Fishmeal and oil pricing • CCS Gauteng TAILWINDS • Fishmeal volumes • Horse mackerel SA volumes • Canned fish volumes and earnings • Hake vessel utilisation • Procurement efficiencies
Slide 66: Outlook - Growth Opportunities
OUTLOOK - GROWTH OPPORTUNITIES SA/NAMIBIA • Canned fish – both domestic and ROA focus • Namibia – long term partnerships with local Namibian entities • Angola – exploring land based facility AQUACULTURE • Exploring greenfield aquaculture strategy • Continue to seek opportunities to invest in existin
Slide 67: Agenda
AGENDA GROUP FINANCIAL & STRATEGIC GUIDANCE OVERVIEW OPERATING OVERVIEW & PERFORMANCE GUIDANCE
Slide 68: Guidance
GUIDANCE • DEBT o SA Debt – intention to de-gear SA balance sheet o US Debt – interest rates fixed to maturity • Volumes will seek to replicate PY performance in H2 • Effect on revenue, at current exchange rate, greater than effect for H1 (R100m), prior year H2 exchange rate R14.7/$ • Fishmeal and f
Slide 69: Revenue & Operating Profit Analysis
REVENUE & OPERATING PROFIT ANALYSIS GROUP REVENUE* (ZARm) CAGR 12.2% 4,542 3,478 2,548 2,437 3,465 3,141 2,222 2014 2015 2016 2017 * Excluding Lamberts Bay Fries First half Second half OPERATING PROFIT* (ZARm) CAGR 9.9% 1125 483 683 380 337 597 505 2014 2015 2016 2017 * Excluding Lamberts Bay Fries
Slide 70: Questions
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