Oceana Group Limited · JSE:OCE
Oceana — H1 2024 Earnings Presentation
51 slides from Oceana's earnings presentation, Jun 10, 2024
Slide 1: Interim Results Investor Presentation
INTERIM RESULTS INVESTOR PRESENTATION For the period ended 31 March 2024 1
Slide 2: Agenda
AGENDA 01 CEO OVERVIEW 02 OPERATIONAL PERFORMANCE 03 GROUP FINANCIAL RESULTS 04 OUTLOOK – SECOND HALF 05 QUESTIONS 2
Slide 3: CEO Overview
CEO OVERVIEW 01 Neville Brink 3
Slide 4: Key Performance Highlights
CEO OVERVIEW KEY PERFORMANCE HIGHLIGHTS DAYBROOK LUCKY STAR LUCKY STAR WILD CAUGHT INVESTMENT Record first half Lucky Star’s West Coast Lower volumes, Strong Balance earnings for strong value Investment – offset by strong Sheet to fund Daybrook with offering to cannery & fishmeal demand and growth o
Slide 5: Operational Performance
OPERATIONAL PERFORMANCE 02 Neville Brink 5
Slide 6: Wild Caught Seafood
WILD CAUGHT SEAFOOD Horse Mackerel Hake Lobster & Squid 6
Slide 7: Horse Mackerel Performance
HORSE MACKEREL PERFORMANCE 100 SA - SEA DAYS & CATCH RATES 200 HORSE MACKEREL - PERFORMANCE DRIVERS 90 180 80 160 • SA catch volumes down 67% due to lower catch rates and 70 140 sea days linked to the unplanned major breakdown of the Catch Rates 60 120 Sea Days 50 100 Desert Diamond and the extended
Slide 8: Hake Performance
HAKE PERFORMANCE FLEET PERFORMANCE & COST HAKE - PERFORMANCE DRIVERS 600 44 50 • Deep sea trawl hake TAC increased by 5%. Catch Rates / Catch Costs 500 37 40 400 29 30 Sea Days 300 • Sales volumes 21% higher due to an improvement in 200 11 10 20 fishing days and vessel utilisation (directly related
Slide 9: Squid & Lobster Performance
SQUID & LOBSTER PERFORMANCE SQUID CATCH RATES / SALES PRICES SQUID / LOBSTER - PERFORMANCE DRIVERS 2 000 250 200 SQUID 1 500 • Lower catch rates due to poor industry wide fishing conditionss Catch Rates Selling Price 150 contributed to a 64% decline in squid sales volumes. 1 000 100 • Strong demand
Slide 10: Squid Business Acquisition
SQUID BUSINESS ACQUISITION TRANSACTION OVERVIEW • Transaction expected to be concluded by end June 2024 to acquire I&J’s squid operations for R 52 million in partnership with an Eastern Cape empowerment partner (49% share) with existing interests in the squid sector. • Assets acquired included 77 sq
Slide 11: Wild Caught Seafood Performance
WILD CAUGHT SEAFOOD PERFORMANCE R’ million Mar 2024 Mar 2023 VAR HAKE – DEEP SEA & INSHORE Revenue 760 928 (18.1%) Operating profit 17 108 (84.2%) OP margin 2.2% 11.6% (9.4%) HORSE MACKEREL – SA & NAMIBIA SQUID & LOBSTER (WCRL & SCRL) 11
Slide 12: Canned Foods & Fishmeal (Africa)
CANNED FOODS & FISHMEAL (AFRICA) 12
Slide 13: Most Iconic Brand Award 2023/2024
MOST ICONIC BRAND AWARD 2023/2024 TOP 10 ICON BRANDS ACROSS ALL CATEGORIES The TGI Survey, a strategic, syndicated Usage and Attitude survey, forms the basis which the 1 Ask Africa Icon Brands 2023/2024 Icon Brands results are sourced from. The benchmark survey celebrates brands across 18 sectors, 1
Slide 14: Canned Foods Performance
CANNED FOODS PERFORMANCE LUCKY STAR SALES VOLUMES CANNED FISH - PERFORMANCE DRIVERS 6000 000 5.0 mill • Pleasing sales volumes of 4.8 million cartons, compared to the 5000 000 4.8 mill 4.2 mill record 5.0 million cartons sold in the prior period and the 4.2 4000 000 2.2 mill million cartons sold for
Slide 15: SA Pilchard Resource
SA PILCHARD RESOURCE SA PILCHARD TAC SA PILCHARD LANDINGS TO MAY 70 000 3 500 65 000 65 000 60 000 3 000 50 000 2 500 40 000 Tons 2 000 Tons 39 000 30 000 32 000 1 500 30 015 26 800 20 000 1 000 10 000 12 250 500 - - 2018 2019 2020 2021 2022 2023 2024 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 16: Canned Pilchard Market Conditions
CANNED PILCHARD MARKET CONDITIONS DEFINED PROTEIN VOLUME GROWTH – MOVING ANNUAL TOTAL 25.0% MARKET CONDITIONS 20.0% 15.0% 12.8% • Consumer spending remains constrained. 10.0% 3.3% 2.7% 5.0% • Protein consumption remains under 0.0% (5.0%) (0.9%) (0.9%) (0.9%) pressure given its higher cost impact on
Slide 17: Lucky Star: Products
LUCKY STAR: PRODUCTS PILCHARDS OTHER FISH CANNED FISH ? MEAT VEGETABLES CANNED FOODS 17
Slide 18: Lucky Star Canned Chicken Products
LUCKY STAR CANNED CHICKEN PRODUCTS ACQUISITION OF UNIQUE OPPORTUNITY VALUE CREATION • Transaction concluded on 2 May 2024 for a 75% stake in a • Capitalising on the growing demand in school feeding and new canning facility for chicken livers and associated chicken the category expansion opportunity
Slide 19: Fishmeal & Oil (Africa) Performance
FISHMEAL & OIL (AFRICA) PERFORMANCE FMO PRODUCTION INPUT (TONS) FMO (AFRICA) - PERFORMANCE DRIVERS 40 000 37 885 37 649 35 000 • Fishmeal and fish oil sales volumes reduced by 15% due 20% 30 000 35% to lower opening inventory levels. 26 219 25 000 • Production volumes remained in line with the prior
Slide 20: Fishmeal & Oil (Africa) Industrial Resource
FISHMEAL & OIL (AFRICA) INDUSTRIAL RESOURCE ANCHOVY BIOMASS, INDUSTRY LANDINGS & TAC (TONS) INDUSTRY RED EYE LANDINGS (TONS) 3000 000 96% 82% 2500 000 160 000 70% 140 000 2000 000 120 000 54% 56% 100 000 Tons 1500 000 48% 47% Tons 80 000 1000 000 60 000 40 000 500 000 20 000 - - 2018 2019 2020 2021
Slide 21: Fishmeal & Oil (Africa) - Reconstruction
FISHMEAL & OIL (AFRICA) - RECONSTRUCTION Boiler Plant: Phase 1 reconstruction successfully completed. 21
Slide 22: Fishmeal & Oil (Africa) - Reconstruction
FISHMEAL & OIL (AFRICA) - RECONSTRUCTION Fishmeal Plant: Phase 1 reconstruction successfully completed. 22
Slide 23: Canned Foods and Fishmeal (Africa) Performance
CANNED FOODS AND FISHMEAL (AFRICA) PERFORMANCE LUCKY STAR – MARKETING R’ million Mar 2024 Mar 2023 VAR Revenue 2 547 2 546 0.1% Operating Profit 152 134 13.1% OP margin 5.9% 5.3% 0.6% LUCKY STAR – OPERATIONS LUCKY STAR - FISHMEAL AND FISH OIL 23
Slide 24: Fishmeal & Fish Oil (US)
FISHMEAL & FISH OIL oes (US) 24
Slide 25: Fishmeal & Fish Oil (USA) Performance
FISHMEAL & FISH OIL (USA) PERFORMANCE 35 000 OPENING STOCK (TONS) FMO (USA) - PERFORMANCE DRIVERS 30 186 28 873 30 000 • Exceptional performance delivering record first half 25 000 earnings. 20 000 Tons 15 000 • Operating margin at 49%, highest since business 10 858 8 812 acquired. 10 000 5 199 5 00
Slide 26: Fishmeal & Fish Oil (USA) Performance
FISHMEAL & FISH OIL (USA) PERFORMANCE FISH OIL SALE VOLUMES (TONS) FISH MEAL SALES VOLUMES (TONS) 20 000 60 000 17 465 17 638 52 803 18 000 50 938 15 452 4 Year Average: 15 821 50 000 16 000 4 Year Average: 45 027 14 000 41 876 12 729 40 000 12 000 27 435 34 488 30 908 Tons Tons 10 000 15 135 15 705
Slide 27: Fishmeal & Fish Oil (USA) Performance
FISHMEAL & FISH OIL (USA) PERFORMANCE FISH MEAL AND FISH OIL PRICING GULF MENHADEN LANDINGS US$/TON (Season 15 April to 2 June - Week 7) 6 000 250 000 5 000 200 000 4 000 US$ / ton 150 000 000 Fish 3 000 100 000 2 000 1 000 50 000 - - Mar 2020 Mar 2021 Mar 2022 Mar 2023 Mar 2024 1 2 3 4 5 6 7 Fish M
Slide 28: Global Market Outlook
GLOBAL MARKET OUTLOOK GLOBAL PRODUCTION OF FARMED SUPPLY 3500 ATLANTIC SALMON 3000 • Global production of fishmeal expected to increase mainly due to Production (1000 mt) 2500 higher production in Peru (2.5 million tons 2024 first season allocation versus prior years premature closure ). 2000 1500 •
Slide 29: Fishmeal & Fish Oil (USA) Performance
FISHMEAL & FISH OIL (USA) PERFORMANCE R’ million Mar 2024 Mar 2023 VAR FMO (USA) - PERFORMANCE DRIVERS Revenue 1 734 1 024 69.4% Operating Profit 848 370 129.2% OP margin 48.9% 36.2% 12.7% USD’million Revenue 91 57 59.8% Operating Profit 44 21 114.7% Av USD: Rand 19.1 18.0 6.1% FISH OIL FISH MEAL 29
Slide 30: Group Financial Results
GROUP FINANCIAL RESULTS 03 Zaf Mahomed 30
Slide 31: March 2024 Financial Highlights
MARCH 2024 FINANCIAL HIGHLIGHTS REVENUE * OPERATING PROFIT * HEPS * INTERIM DIVIDEND LOWER NET DEBT 12.1% 57.1% 84.6% 50.0% 16.7% Mar 2024: R5.0bn Mar 2024: R1.0bn Mar 2024: 578.8c Mar 2024: 195cps Mar 2024: R2.5bn (Mar 2023: R4.5bn) (Mar 2023: R0.6bn) (Mar 2023: 313.5c) (Mar 2023: 130 cps
Slide 32: 5 Year Operating Profit Analysis
5 YEAR OPERATING PROFIT ANALYSIS H1 : H2 OPERATING PROFIT (R MILLION) OPERATING PROFIT BY SEGMENT (R MILLION) * 1 600 1 490 25% 1 600 1 399 1 400 1 400 1 243 20% 1 200 1 117 1 200 842 17 1 000 794 1 000 15% 151 533 800 898 800 10% 600 600 108 1 017 197 134 400 400 848 222 605 648 5% 584 105 200 200
Slide 33: Statement of Comprehensive Income Overview
STATEMENT OF COMPREHENSIVE INCOME OVERVIEW R’ million Mar 24 Mar 23 VAR • Revenue Growth (+12.1%) : Driven by strong pricing across all products, particularly fish oil and the effect of Revenue 5 041 4 498 12.1% the weaker rand exchange rate on export & US dollar translated revenue. Gross profit 1 7
Slide 34: March 2024 Capex
MARCH 2024 CAPEX * CAPITAL EXPENDITURE (R MILLION) * PLANNED 2024 CAPITAL EXPENDITURE BY SEGMENT* 500 458 450 26% 400 Canned Foods 37% FMO (Africa) 190 350 FY 24 FMO (US) 300 297 R 700m Wildcaught Seafood 257 R Million 250 102 32 208 21% 200 11 16% 150 268 100 225 • FY 24 major capex expenditure of
Slide 35: 5 Year Debt Analysis
5 YEAR DEBT ANALYSIS KEY HIGHLIGHTS 16.75 15.10 18.15 18.93 18.93 Rand : USD 4 000 2.5 SA US NET DEBT / EBITDA NET DEBT / EBITDA R3.6 bn 3 500 RATIO* RATIO 3 000 R3.0 bn R3.1 bn 2.0 2.8 x 0.4 x 1.5 • 20% Reduction in EBITDA • Term Debt Settlement 1.7 1.4 R2.5 bn • Increase in Short Term • Higher Cas
Slide 36: Capital Allocation – Investing for Growth
CAPITAL ALLOCATION – INVESTING FOR GROWTH CANNED FOODS FMO (AFRICA & US) WILDCAUGHT OBJECTIVES • Utilising Balance Sheet Capacity. • Expansion Programme to Drive Efficiency & Compliance. FRAP – 15-year fishing rights secured. OUTCOME (ROI > WACC) R 60 million R 100 million R 60 million FY 2023 • Can
Slide 37: Capital Allocation – Building for Growth
CAPITAL ALLOCATION – BUILDING FOR GROWTH M&A DIVIDEND DEBT Drive growth Relative to Prudent debt OBJECTIVES through value earnings, capex management in a accretive requirements & high interest rate opportunities. debt levels. environment. Excess cash used to pay CCS sold for c.R760m. DPS: down porti
Slide 38: Outlook – Second Half
OUTLOOK – SECOND HALF 04 Neville Brink 38
Slide 39: Outlook for the Remainder of FY24
OUTLOOK FOR THE REMAINDER OF FY 24 CANNED FOODS / FMO (AFRICA) FISHMEAL AND OIL (US) WILD CAUGHT GROW CONSUMPTION / EXPAND THE BRAND OPTIMISE CAPACITY & EFFICIENCY FLEET INVESTMENT • Focused cost management - Increased local • Strong fish oil pricing: Short to medium • Second half performance largel
Slide 40: Strategic Growth Drivers
STRATEGIC GROWTH DRIVERS. ...~...: [cy srl icky sti rom / ey “Wen s ta Y Pee 2 K cae VES, "conn BOLT-ON BRAND EXTENSION/ UPGRADED INNOVATION ACQUISITIONS PRODUCT DEVELOPMENT VESSELS
Slide 41: 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 42: Questions
QUESTIONS 05 Neville Brink & Zaf Mahomed 42
Slide 43: Appendices
APPENDICES 43
Slide 44: Statement of Comprehensive Income Overview
STATEMENT OF COMPREHENSIVE INCOME OVERVIEW R’ million Mar 24 Mar 23 VAR • Revenue Growth (+12.1%) : Driven by strong pricing across all products, particularly fish oil and the effect of the weaker Revenue 5 041 4 498 12.1% rand exchange rate on export & US dollar translated revenue. Gross profit 1 7
Slide 45: Statement of Financial Position Overview
STATEMENT OF FINANCIAL POSITION OVERVIEW R’ million Mar 24 Mar 23 VAR 1. Capital expenditure increased by 44.9% to R297 million (March 2023: R205 million) Property, plant & equipment 1 2 410 2 006 20.% 6 073 5 729 2. Mainly goodwill, intellectual property and trademarks arising Intangible assets 2 6
Slide 46: March 24 Net Cash and Cash Equivalents
MARCH 24 NET CASH AND CASH EQUIVALENTS* FREE CASH CONVERSION RATIO³ Mar 24 21% R millions SA: R 306m SA: (R 594m) SA: R 127m US: R 925m US: (R 2m) US: (R 39m) Mar 23 42% Notes: 1) Capital expenditure includes R14m of increased investment in a subsidiary and is net of proceeds on disposal of assets o
Slide 47: March 2024 Debt Analysis
MARCH 2024 DEBT ANALYSIS R’ million Mar 24 Mar 23* VAR 1. SA net debt/ EBITDA ratio increased to 2.8 times mainly due to South Africa (R million) 20% reduction in EBITDA. Net debt increased due to an Gross debt 902 1 097 (18%) increase in short term borrowings to fund working capital and Net debt**
Slide 48: 2024 Key Performance Indicators
2024 KEY PERFORMANCE INDICATORS Segment KPI Unit Mar 24 Mar 23 VAR CANNED FISH Revenue R million 2 329 2 342 (0.5%) (Lucky Star) Sales volumes 000 cartons 4 817 5 047 (4.6%) Pilchard quota (own & contracted) tons 20 136 13 261 51.8% Pilchard landings tons 2 962 7 630 (61.2%) Own cartons produced 000
Slide 49: 2024 Key Performance Indicators
2024 KEY PERFORMANCE INDICATORS Segment KPI Unit Mar 24 Mar 23 VAR FMO (US) Revenue USD million 91 57 59.8% (Daybrook) Menhaden landings (fiscal year) 000 fish 38 577 44 111 (12.5%) Fishmeal sales volumes tons 19 178 21 895 (12.4%) Fish oil sales volumes tons 9 671 4 852 99.3% Operating profit % 48.
Slide 50: 2024 Key Performance Indicators
2024 KEY PERFORMANCE INDICATORS Segment KPI Unit Mar 24 Mar 23 VAR HAKE Revenue R million 284 253 11.9% (Daybrook) Sales volumes tons 4 925 4 077 20.8% Quota (own & contracted) tons 13 471 14 732 (8.5%) Av. Price movement Euro/ton (4%) ● 12% ● Fleet utilisation % 1% ● 7% ● Catch rates tons/day 7% ●
Slide 51: Oceana Pillars
OCEANA PILLARS LUCKY STAR BRAND FISHMEAL AND OIL (FMO) WILD CAUGHT SEAFOOD Affordable branded protein for human Fish protein for animal / aquaculture Fish protein for human consumption consumption consumption MARKETING PRODUCTION HORSE MACKEREL SQUID (Canned fish & foods) (Canneries) HAKE LOBSTER 11