Oceana Group Limited · JSE:OCE
Oceana — H1 2023 Earnings Presentation
55 slides from Oceana's earnings presentation, May 5, 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION For the six months ended 31 March 2023 5th June 2023
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 CEO OVERVIEW Neville Brink GROUP FINANCIAL RESULTS Zaf Mahomed OPERATIONAL PERFORMANCE Neville Brink OUTLOOK Neville Brink QUESTIONS Neville Brink / Zaf Mahomed 3
Slide 4: CEO Overview
CEO OVERVIEW Neville Brink
Slide 5: Oceana Pillars
OCEANA PILLARS LUCKY STAR FISHMEAL WILD BRAND & OIL CAUGHT SEAFOOD Affordable branded protein Fish protein for animal / Fish protein for human for human consumption aquaculture consumption consumption THE MARKETING (fish, food) PRODUCTION (canneries) OCE HORSE MACKEREL HAKE, LOBSTER & SQUID ANA 1. L
Slide 6: Tough Macro Environment
TOUGH MACRO ENVIRONMENT THE GROUP DELIVERED A STRONG PERFORMANCE FOR THE SIX MONTHS SA CONSUMER CONFIDENCE INDEX * INFLATION RATES ** 10.0% 8.0% 6.0% (9) (8) 4.0% (13) 2.0% (20) 0.0% Dec-22 Jun-22 Jul-22 Apr-22 Mar-23 Feb-23 Apr-23 Sep-22 Jan-23 Oct-22 Nov-22 May-22 Aug-22 (23) (25) Jan 22 Jul 22 Ja
Slide 7: CEO Overview: Key Performance Highlights
CEO OVERVIEW KEY PERFORMANCE HIGHLIGHTS Higher opening Record sales Record fish oil Strong demand Disposal of CCS inventory levels volumes for prices in USD and pricing for R760 million of canned fish, Lucky Star, terms across product concluded on fishmeal & fish offset by margin range 4 April 2023
Slide 8: Group Financial Results
GROUP FINANCIAL RESULTS Zaf Mahomed
Slide 9: 2023 H1 Financial Highlights
2023 H1 FINANCIAL HIGHLIGHTS Revenue * Operating Profit * HEPS * Dividends Net Debt To EBITDA 48% 88% 123% 136% 1.6 x Mar 23: R4.5bn Mar 23: R648m Mar 23: 313.5c Mar 23: 130c Mar 22: 1.8x (Mar 22: R3.0bn) (Mar 22: R345m) (Mar 22: 140.4c) (Mar 22: 55c) * From continuing operations. CCS has be
Slide 10: 5 Year H1 Segmental Analysis
5 YEAR H1 SEGMENTAL ANALYSIS * REVENUE (R MILLION) OPERATING PROFIT (R MILLION) 5,000 700 18.0% 4,500 16.0% 600 4,000 14.0% 3,500 500 12.0% 3,000 400 10.0% 2,500 300 8.0% 2,000 6.0% 1,500 200 4.0% 1,000 100 500 2.0% - 0 0.0% H1 2019 H1 2020 H1 2021 H1 2022 H1 2023 H1 2019 H1 2020 H1 2021 H1 2022 H1
Slide 11: 2023 H1 Working Capital and Capex
2023 H1 WORKING CAPITAL AND CAPEX * WORKING CAPITAL CAPITAL EXPENDITURE (R MILLION) 155 205 110 156 116 107 35 32 35 36 Mar 22 Mar 23 Inventory Days Debtors Days Creditors Days Net Working Capital Days Mar 22 Mar-23 INVESTMENT IN INVENTORY • H1 23 capex projects include: FMO (USA) to increase plant
Slide 12: 2023 H1 Debt Analysis
2023 H1 DEBT ANALYSIS * R’million Mar 23 Mar 22 VAR 1. Settlement of term debt offset by increased short term borrowings to fund increased inventory levels resulted Africa (R million) in increased net debt and net debt leverage ratio to 2.1 Gross debt 1,097 1,245 (12%) times Net debt 1 1,841 1,136 6
Slide 13: Net Cash and Cash Equivalents
NET CASH AND CASH EQUIVALENTS* R millions SA: R379m US: R405m SA: (R680m) US: R458m SA: (R103m) US: (R77m) Notes: 1) Capital expenditure is net of proceeds on disposal of assets of R9m 2) Debt service includes R33m lease liability repayment * From continuing operations. CCS has been treated as a dis
Slide 14: Capital Allocation
CAPITAL ALLOCATION DEBT REDUCTION STRATEGY CAPITAL ALLOCATION PRIORITIES • Strategy to de-lever the balance sheet in high • Maintain canned fish & fishmeal & fish oil interest rate environment is prudent inventory levels to service demand levels • The bulk of CCS sale proceeds were used to • Investm
Slide 15: Operational Performance
OPERATIONAL PERFORMANCE Neville Brink
Slide 16: Wild Caught Seafood
WILD CAUGHT OPERATIONAL PERFORMANCE SEAFOOD Horse mackerel Hake Lobster & squid
Slide 17: Wild Caught Seafood: Value Chain Overview
WILD CAUGHT SEAFOOD: VALUE CHAIN OVERVIEW EU Hake, Squid USA SCRL ASIA WCRL AFRICA HM SA PRIMARY MARKETS Hake, HM 2 horse mackerel trawlers FISHING VESSEL ALLOCATED FISHING ALLOCATED RIGHTS CAPACITY QUOTA* RIGHTS QUOTA* SA Horse 25 000 tons 6 611 tons 5 hake trawlers West Coast Rock Mackerel (HM) 41
Slide 18: Wild Caught Seafood H1 Performance
WILD CAUGHT SEAFOOD H1 PERFORMANCE HAKE – DEEP SEA & INSHORE R’million Mar 23 Mar 22 VAR Revenue 927.6 800.7 15.9% Operating Profit 108.0 104.5 3.4% OP margin 11.6% 13.1% (1.5%) • Performance of the Wild caught seafood segment which includes horse mackerel, hake, lobster and squid HORSE MACKEREL – S
Slide 19: Horse Mackerel H1 Performance
HORSE MACKEREL H1 PERFORMANCE CATCH RATES (TONS / DAY) HORSE MACKEREL - PERFORMANCE DRIVERS 86 81 • SA catch volumes down 52% due to lower catch rates and 69 Desert Diamond undergoing planned main engine overhaul 48 • Namibian catch volumes increased by 40% due to increased seadays and catch rates M
Slide 20: Hake H1 Performance
HAKE H1 PERFORMANCE TAC AND CATCH RATES (TONS / SEA DAY) HAKE - PERFORMANCE DRIVERS 140,000 10.8 10.7 10.0 10.4 120,000 9.7 • Hake catch volumes 35% lower due to fewer seadays (both 100,000 80,000 planned and unplanned maintenance) and lower catch rates 60,000 40,000 • High fuel costs continued to a
Slide 21: Lobster & Squid H1 Performance
LOBSTER & SQUID H1 PERFORMANCE SQUID CATCH RATES (TONS / MAN) LOBSTER & SQUID - PERFORMANCE DRIVERS 1,8 1,3 SQUID • Squid catch rates 35% higher than prior year. Current season closed from 1 May to 30 June • Squid demand remains strong with record Euro price levels supported by a favourable exchange
Slide 22: Canned Fish & Fishmeal (Africa)
CANNED FISH OPERATIONAL PERFORMANCE & FISHMEAL (AFRICA)
Slide 23: Lucky Star Brand Supply Chain Overview
LUCKY STAR BRAND SUPPLY CHAIN OVERVIEW CHINA X1 PACIFIC NW THAI Africa X2 MEXICO NAM X1 SA X2 SA PILCHARD TAC 100,000 SA 80,000 CANNERY LOCATIONS 60,000 40,000 7 RSW vessels CANNERY SUPPLY TO LUCKY STAR 20,000 RAW FISH SUPPLY TO LUCKY STAR CANNERIES - F14 F15 F16 F17 F18 F19 F20 F21 F22 F23
Slide 24: Canned Fish H1 Performance
CANNED FISH H1 PERFORMANCE CANNED FISH AND FISHMEAL (AFRICA) PERFORMANCE R’million Mar 23 Mar 22 VAR CANNED FISH - PERFORMANCE DRIVERS Revenue 2,546.0 1,840.2 38.4% Operating Profit • Strong inventory levels 134.1 165.5 (18.9%) OP margin 5.3% 9.0% (3.7%) • Sales volumes up 21% to 5 million cartons :
Slide 25: Cost Pressures and Mitigants
COST PRESSURES AND MITIGANTS WR FROZEN FISH (R/TON) FREIGHT FROZEN FISH (R/CONTAINER) 50% 8% 63.8% KEY LEVERS TO MITIGATE COST PUSH 22.5% 28.7% 8.4% 3.3% • Strong brand and stock availability has enabled volume -1.6% growth strategy -16.3% -15.2% FY20 FY21 FY22 H123 FY20 FY21 FY22 H123 • Maintaining
Slide 26: Canned Fish Supply Conditions
CANNED FISH SUPPLY CONDITIONS RAW FISH SUPPLY (TONS) 60,000 STRONG SUPPLY TO MEET GROWING DEMAND 50,000 40,000 • The Pilchard TAC was increased by 30% to 39,000 tons based 30,000 87% on scientific data received from the small pelagic survey. 90% 20,000 This will drive higher mix of fresh fish 10,000
Slide 27: Canned Fish Market Conditions
CANNED FISH MARKET CONDITIONS SALES VALUE GROWTH * CONSUMER DISCRETIONARY SPEND UNDER PRESSURE 40.0% 35.0% 30.0% Consumers 25.0% 20.0% • Nearly half say their financial position is worsening 15.0% • One in four don’t have enough to cover full food & shelter 10.0% needs 5.0% 0.0% • Growing shopper ac
Slide 28: SA Pelagic Fishing Conditions
SA PELAGIC FISHING CONDITIONS PILCHARD LANDINGS (TONS) TO END MAY Pilchards 12,000 10,000 11,111 • Catches in the East fishing region are progressing well. Fishing 8,000 in the West will commence once fish size and firmness 6,000 6,215 improve 4,000 2,000 - Anchovy Oct Nov Dec Jan Feb Mar April May
Slide 29: Fishmeal & Fish Oil (USA)
FISHMEAL & OPERATIONAL PERFORMANCE FISH OIL (USA)
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Slide 31: Global FMO: Value Chain Overview
GLOBAL FMO: VALUE CHAIN OVERVIEW EU Aqua ASIA USA Aqua/ Petfood EU Animal Aqua ASIA Aqua/ AFRICA Animal Animal 12 * vessels + planes 1 processing plant Global marketing team * owned by Westbank Fishing SA Animal FMO AFRICA MARKETS FMO USA MARKETS DAYBROOK (USA) LUCKY STAR (SA) 230k tons Gulf 120k to
Slide 32: Fishmeal & Fish Oil (USA) H1 Performance
FISHMEAL & FISH OIL (USA) H1 PERFORMANCE R’million Mar 23 Mar 22 VAR FMO (US) - PERFORMANCE DRIVERS Revenue 1,023.9 402.9 >100.0% Operating Profit 370.2 46.4 >100.0% • Fishing operations were in the off-season for most of H1 OP margin 36.2% 11.5% 24.6% • Improved opening stock levels off the back of
Slide 33: Global Market Overview – Supply
GLOBAL MARKET OVERVIEW – SUPPLY GLOBAL FISHMEAL OUTPUT Global Supply Dynamics 5653 4952 5046 5231 5136 4798 • Probability of lower 1st season quota in Peru as the coastal El Nino occurrence negatively impacts the anchovy fishery • Lower Chinese output as a result of a shortened season and lower land
Slide 34: Global Market Overview – Demand
GLOBAL MARKET OVERVIEW – DEMAND WILD CAPTURE AND AQUACULTURE PRODUCTION Global Demand Dynamics 200 9 8 • Demand for feed ingredients expected to remain stable as 160 7 commodity pricing normalises Production (mil tons) World Population (bn) 6 120 AQUACULTURE 5 • Chinese consumption delayed - late st
Slide 35: FMO (USA) Fishing Conditions
FMO (USA) FISHING CONDITIONS GULF MENHADEN LANDINGS (000 FISH) WEEK 6 OF 28 OFF SEASON INVESTMENT TO DRIVE VOLUME 180,000 Off- Season 160,000 • 2nd pair of jet-propelled purse-boats acquired by Westbank 140,000 • Westbank full compliment of H2B visa fishermen 120,000 obtained 100,000 • Fish storage
Slide 36: Outlook
OUTLOOK Neville Brink
Slide 37: Focus Areas
FOCUS AREAS WILD CAUGHT SEAFOOD LUCKY STAR BRAND FISHMEAL AND FISH OIL • Record horse mackerel and squid • Good stock levels and stable fish • Good stock levels carried into H2 prices supply • Fish oil pricing expected to remain • Maximise seadays • Drive sales volumes growth by being high until Per
Slide 38: Questions
QUESTIONS Neville Brink / Zaf Mahomed
Slide 39: Appendices
APPENDICES
Slide 40: Statement of Comprehensive Income Overview
STATEMENT OF COMPREHENSIVE INCOME OVERVIEW * Restated R’million Mar 23 Mar 22 VAR 1. Good stock availability and strong demand for affordable protein across our product range. Improved pricing, Revenue 1 4,497.5 3,043.7 47.8% particularly fish oil, and the benefit of a weaker exchange Gross profit 1
Slide 41: Discontinued Operations
DISCONTINUED OPERATIONS On 4th October 2022 Oceana announced that it had entered into an Operating profit for segmental disclosure differs to that for discontinued agreement to dispose of CCS subject to regulatory approvals (EV of R895 operation disclosure due to intercompany eliminations for revenu
Slide 42: Statement of Financial Position Overview
STATEMENT OF FINANCIAL POSITION OVERVIEW Restated R’million Mar 23 Mar 22 VAR 1. Mainly goodwill, intellectual property and trademarks Property, plant & equipment 2,006.3 2,046.7 (2.0%) arising from the Daybrook acquisition. Increase relates to Intangible assets 1 5,728.7 4,744.8 20.7% higher exchan
Slide 43: FMO (Africa) H1 Performance
FMO (AFRICA) H1 PERFORMANCE FISH OIL SALES PRICES (USD / TON) 4,000.0 FMO (AFRICA) - PERFORMANCE DRIVERS 3,000.0 • Anchovy and red eye landings 76% higher than prior year +59.7% and offcuts from cannery 8% higher 2,000.0 Record Fish 1,000.0 Oil Prices • Production yields reduced by 2% due to lower f
Slide 44: Commercial Cold Storage H1 Performance
COMMERCIAL COLD STORAGE H1 PERFORMANCE R’million Mar 23 Mar 22 VAR CCS - PERFORMANCE DRIVERS Revenue 171.7 135.5 26.7% • Strong performance with a recovery in occupancy rates Operating Profit 50.5 27.7 82.7% across all regions OP margin 29.4% 20.4% 9.0% • Western Cape : • Increased frozen fish holdi
Slide 45: H1 2023 Key Performance Indicators
H1 2023 KEY PERFORMANCE INDICATORS Segment KPI Unit Mar 23 Mar 22 VAR CANNED FISH Revenue R million 2,342 1,737 34.8% (Lucky Star) Sales volumes 000 cartons 5,047 4,175 20.9% Pilchard quota (own & contracted) tons 13,261 9,810 35.2% Pilchard Landings tons 7,630 5,215 46.3% Own cartons produced 000 c
Slide 46: H1 2023 Key Performance Indicators
H1 2023 KEY PERFORMANCE INDICATORS Segment KPI Unit Mar 23 Mar 22 VAR FMO (US) Revenue USD million 57.0 26.1 13.3% (Daybrook) Menhaden landings 000 fish 44,111 44,619 (1.1%) Fishmeal sales volumes tons 21,895 12,274 78.4% Fish oil sales volumes tons 4,852 1,933 151.0% Operating profit % 36.2% 11.9%
Slide 47: H1 2023 Key Performance Indicators
H1 2023 KEY PERFORMANCE INDICATORS Segment KPI Unit Mar 23 Mar 22 VAR HAKE Revenue R million 253 265 (4.2%) Sales volumes tons 4,077 6,106 (33.2%) Quota (own & contracted) tons 14,732 14,497 1.6% Av. Price movement Euro/ton 12% ● (4%) ● Fleet utilisation % 7% ● (5%) ● Catch rates tons/day (9%) ● 25%
Slide 48: ESG
ESG
Slide 49: ESG Disclosure
ESG DISCLOSURE • We have focused on aligning our disclosure with applicable standards to ensure we meet our stakeholders’ shifting expectations on ESG disclosure • ESG rating an outcome of our sustainability strategy • Measure of the OGL ESG transparency 49
Slide 50: Impact of Loadshedding on Oceana's SA Operations
IMPACT OF LOADSHEDDING ON OCEANA’S SA OPERATIONS • Vessel operations not impacted – energy self generated ELECTRICITY COSTS MAKE UP • Lucky Star’s West Coast facilities primarily powered by coal 2% OF THE boilers with redundancy provided by generators (incremental diesel costs +/- R2 million per mon
Slide 51: Energy Security and Carbon Neutrality
ENERGY SECURITY AND CARBON NEUTRALITY WEST COAST 4.5MW SOLAR PV FACILITY • EIA and RFP completed. Land Use Application in progress. Estimated implementation Q2 2024. • Phase 1 - 4.5MW PV Solar installation • Approximately 40% of West Coast facilities electricity demand • Approximately 5100tCO2e (car
Slide 52: Oceana Maritime Academy
OCEANA MARITIME ACADEMY INVESTING IN TRAINING & SKILLS BIG OPPORTUNITIES FOR SMALL TRAINING THE HOUT BAY –SCALE FISHERS COMMUNITY 12 88 98% TRAINING COMMUNITY ATTENDANCE SESSIONS MEMBERS RATE TRAINED 3 108 800+ 85% PROVINCES CO-OPERATIVES FISHERS ATTENDANCE TRAINED TRAINED RATE KWA-ZULU EASTERN NORT
Slide 53: Responding to Community Needs
RESPONDING TO COMMUNITY NEEDS DRIVING FOOD SECURIY INVESTING IN THE WEST COAST CARP PROJECT HP WILLIAMS PRIMARY SCHOOL DUAL 1 CATCH FEEDS 110 000+ PURPOSE AROUND MEALS CLEAN LAKES 800 PROVIDED TO & PEOPLE DATE COMMUNITIES DAILY FULLY FEEDS MINIBUS TO TRANSPORT EQUIPPED UP TO LEARNERS KITCHEN & 500 R
Slide 54: Fostering an Inclusive Culture
FOSTERING AN INCLUSIVE CULTURE THE ASK DEFINE, COMMUNICATE AND EMBED OCEANA GROUP’S CORE VALUES & MEASURE ENGAGEMENT LEVELS Build an Oceana where people are treated with dignity and respect, trusted to contribute courageously to the success of Oceana. THE OUTPUT A clearly defined set of OCEANA GROUP
Slide 55: Thank You
— POSITIVELY IMPACTING LIVES — OCEANA/GROUP