Oceana Group Limited · JSE:OCE
Oceana — FY2023 Earnings Presentation
54 slides from Oceana's earnings presentation, Nov 27, 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION For the year ended 30 September 2023 1
Slide 2: Agenda
AGENDA 01 CEO Overview 02 Group Financial Results 03 Operational Performance 04 Outlook & Strategy 05 Questions 2
Slide 3: CEO Overview
CEO OVERVIEW 01 Neville Brink 3
Slide 4: 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 EN
Slide 5: Diversified Global Business
DIVERSIFIED GLOBAL BUSINESS 5 FISHING GEOGRAPHIES EUROPE NORTH REVENUE AMERICA REVENUE 17% 15% FAR EAST 36 REVENUE 6% CUSTOMER REST OF GEOGRAPHIES AFRICA REVENUE 9% 11 5 2 084 AUSTRALIA VESSELS PRODUCTION EMPLOYEES REVENUE FACILITIES 1% 13 2 933 SOUTHERN AFRICA VESSELS PRODUCTION EMPLOYEES REVENUE F
Slide 6: Key Performance Highlights
CEO OVERVIEW KEY PERFORMANCE HIGHLIGHTS Delivered on Daybrook Strong demand Focused inventory Repaid R767 volume strategy operating profit and pricing across management of million term debt with 9.6 million up 30% in USD wild caught canned fish and in line with debt Lucky Star cartons terms, aided b
Slide 7: Group Financial Results
GROUP FINANCIAL RESULTS 02 Zaf Mahomed 7
Slide 8: 2023 Performance Highlights
2023 PERFORMANCE HIGHLIGHTS REVENUE * OPERATING PROFIT * HEPS * DIVIDENDS NET DEBT TO EBITDA 22.6% 19.8% 29.2% 25.7% 1.2x 2023: R10.0bn 2023: R1.5bn 2023: 808.8c 2023: 435 cps 2022: 1.7x (2022: R8.1bn) (2022: R1.2bn) (2022: 626.0c) (2022: 346 cps) * From continuing operations. CCS was dereco
Slide 9: 5 Year Segmental Analysis
5 YEAR SEGMENTAL ANALYSIS * REVENUE (R MILLION) OPERATING PROFIT (R MILLION) 12 000 1 600 18% 1 400 16% 10 000 9% 17% 14% 1 200 27% 12% 8 000 12% 35% 20% 20% 1 000 28% 21% 23% 36% 10% 6 000 800 39% 56% 8% 41% 57% 600 40% 4 000 56% 6% 56% 56% 43% 400 56% 4% 2 000 48% 200 32% 2% 27% 33% 24% 24% 21% 24
Slide 10: Statement of Comprehensive Income Overview
STATEMENT OF COMPREHENSIVE INCOME OVERVIEW R’ million 2023 2022 VAR • Revenue Growth (+22.6%) : Driven by strong demand for affordable protein increased consumption and sales volumes. Revenue 9 987 8 148 22.6% Revenue also benefitted from improved pricing across all products, particularly for fish o
Slide 11: 2023 Working Capital
2023 WORKING CAPITAL * WORKING CAPITAL INVESTMENT IN INVENTORY 140 • Increase in net working capital days driven by planned investment in inventory to ensure availability to meet continued market 120 demand • Lucky Star’s inventory closed at R1.6 billion (2022: R 1.3 billion) and 100 95 Daybrook’s i
Slide 12: 2023 Capex
2023 CAPEX * CAPITAL EXPENDITURE (R MILLION) * INVESTMENT IN SA OPERATIONS 700 • Major projects in the year included : (i) R54 million on initial phase of fishmeal & oil facility upgrades 600 (ii) R61 million on construction of canned meat facility and (iii) R106 million on upgrade to flagship hake
Slide 13: 2023 Debt Analysis
2023 DEBT ANALYSIS R’ million 2023 2022 VAR 1. Settlement of SA term debt together with improved EBITDA levels resulted in net debt : EBITDA ratio reducing to 1.0 times Africa (R million) 2. US net debt : EBITDA ratio improved to 1.3 times due primarily Gross debt 979 1 249 (22%) to settlement of te
Slide 14: 5 Year Debt Analysis
5 YEAR DEBT ANALYSIS 15.2 16.8 15.1 18.2 18.9 Rand : USD 4,000,000 2.5 R3.7 bn 3,500,000 2.2x R3.6 bn R3.1 bn 2.0 3,000,000 R3.0 bn 49% 1.7x 2,500,000 56% R2.5 bn 1.5x 1.5 1.4x 55% 59% 2,000,000 60% 1.2x 1.0 1,500,000 1,000,000 51% 44% 0.5 45% 41% 500,000 40% 0 - 2019 2020 2021 2022 2023 SA Gross De
Slide 15: Net Cash and Cash Equivalents
NET CASH AND CASH EQUIVALENTS* 2023 82% R millions SA: R949m SA: (R424m) SA: (R445m) US: R881m US: R291m US: (R143m) 2022 38% SA: (R310m) US: (R368m) Notes: 1) Capital expenditure is net of proceeds on disposal of assets of R10m 2) Net debt repaid includes R38m lease liability repayment and is the s
Slide 16: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES WORKING CAPITAL RE-INVEST DIVIDENDS DEBT GROWTH Sustain at current Incremental capital Relative to Continue to Create balance levels, subject to expenditure phased earnings, capital manage debt sheet capacity for seasonal cyclicality over next 3 years of expenditure pru
Slide 17: Operational Performance
OPERATIONAL PERFORMANCE 03 Neville Brink 17
Slide 18: Wild Caught Seafood
WILD CAUGHT SEAFOOD Horse Mackerel Hake Lobster & Squid 18
Slide 19: Wild Caught Seafood Performance
WILD CAUGHT SEAFOOD PERFORMANCE R’ million 2023 2022 VAR HAKE – DEEP SEA & INSHORE Revenue 1 737 1 592 9.1% Operating profit 127 150 (15.3%) OP margin 7.3% 9.4% (2.1%) HORSE MACKEREL – SA & NAMIBIA SQUID & LOBSTER (WCRL & SCRL) 19
Slide 20: Horse Mackerel Performance
HORSE MACKEREL PERFORMANCE CATCH RATES & COST 100 35 000 HORSE MACKEREL - PERFORMANCE DRIVERS 30 000 80 25 000 • SA catch volumes 40% lower due to poor catch rates and 60 20 000 Desert Diamond planned main engine overhaul in H1 40 15 000 10 000 • Namibian catch volumes increased by 8% due to 20 5 00
Slide 21: Hake Performance
HAKE PERFORMANCE FLEET PERFORMANCE & COST 1 400 50 HAKE - PERFORMANCE DRIVERS 45 1 200 1 000 40 • Hake catch volumes 35% lower due to fewer seadays 35 30 (both planned and unplanned maintenance) and lower 800 25 catch rates 600 20 400 15 • Beatrice Marine upgrade and freon conversion 10 200 5 succes
Slide 22: Squid & Lobster Performance
SQUID & LOBSTER PERFORMANCE SQUID CATCH RATES / SALES PRICES 7 000 250 LOBSTER & SQUID - PERFORMANCE DRIVERS 6 000 200 5 000 SQUID 150 4 000 • Squid catch rates 2% lower than prior year and well 3 000 100 below cyclical highs 2 000 50 • Squid demand remains strong with record euro price 1 000 levels
Slide 23: Fishing Rights Application Process (FRAP) - Appeals
FISHING RIGHTS APPLICATION PROCESS (FRAP) - APPEALS FRAP OCEANA SQUID LICENSES • All FRAP sector appeals finalised with exception of small pelagic sector (pilchards, anchovy) 89 89 89 — Squid appeals decision announced in June 2023. Oceana’s licenses reduced from 89 to 81 licenses. Following a succe
Slide 24: Canned Fish & Fishmeal (Africa)
CANNED FISH & FISHMEAL (AFRICA) OPERATIONAL PERFORMACE 24
Slide 25: Canned Fish and Fishmeal (Africa) Performance
CANNED FISH AND FISHMEAL (AFRICA) PERFORMANCE R’ million 2023 2022 VAR LUCKY STAR – MARKETING Revenue 5 553 4 610 20.5% Operating Profit 496 476 4.2% OP margin 8.9% 10.3% (1.4%) Loadshedding increased the reliance on generators at both the canned fish and fishmeal operations, resulting in incrementa
Slide 26: Canned Fish Performance
CANNED FISH PERFORMANCE SALES VOLUME / PRICE 9.0% VOLUME GROWTH CANNED FISH - PERFORMANCE DRIVERS 10,000,000 12.0% 9,000,000 10,1% 10.0% 8,4% • 9% sales volume growth to 9.6 million cartons in a 8,000,000 8.0% constrained consumer environment 7,000,000 3,9% 6.0% 6,000,000 5,000,000 4.0% • Strategy t
Slide 27: Canned Fish: 3 Year KPIs
CANNED FISH : 3 YEAR KPIs 16 000 SA PILCHARD LANDINGS PRODUCTION COST (Key inputs) 50.0% 14 000 40.0% 12 000 10 000 30.0% 8 000 20.0% 6 000 10.0% 4 000 2 000 0.0% - -10.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept FY21 FY22 FY23 2023 2022 Frozen fish (R/ton) Tin Cans (R/can) Tomato Paste (R/t
Slide 28: Canned Fish Market Conditions
CANNED FISH MARKET CONDITIONS 12 MM VOLUME GROWTH (Food excl staples) CONSUMERS – INCREASING PRICE SENSITVITY 14% 11.4% 12% 10% 9.4% 8.0% Consumer Trends 8% • Over 70% of purchases on promotion across most food items 6% 3.5% 4% • Just over 50% buy essential items only 2% 0% • Decreasing brand loyalt
Slide 29: Overview of Competing Proteins
OVERVIEW OF COMPETING PROTEINS TRADE DESK – DEFINED PROTEIN – VOLUME GROWTH – MOVING ANNUAL TOTAL (MAT) YEAR AGO (YA) vs THIS YEAR (TY) 100% 12% 1% 6% 1% 62% 2% 16% 15.0 9.7 10.0 5.0 1.7 0.0 -0.1 -0.5 -1.8 -1.4 - 5.0 -2.7 -2.8 -4.4 -4.1 - 10.0 -7.9 -8.9 -9.3 -9.1 - 15.0 -12.6 - 20.0 - 25.0 -22.9 TOT
Slide 30: Fishmeal & Oil (Africa) Performance
FISHMEAL & OIL (AFRICA) PERFORMANCE ANCHOVY / RED EYE LANDINGS (TONS) 90 000 FMO (AFRICA) - PERFORMANCE DRIVERS 80 000 70 000 60 000 • 6% reduction in red eye and anchovy landings partially 50 000 mitigated by increase in pilchard offcut volumes 40 000 30 000 20 000 • Production yields reduced to 23
Slide 31: Fishmeal & Oil (Africa): 3 Year KPIs
FISHMEAL & OIL (AFRICA) : 3 YEAR KPIs PRODUCTION 6 000 FISH OIL VOLUMES / PRICE 6 000 30 000 6.0% 5 000 5 000 25 000 5.0% 4 000 4 000 20 000 4.0% 3 000 3 000 15 000 3.0% 10 000 2.0% 2 000 2 000 5 000 1.0% 1 000 1 000 - 0.0% - - 2021 2022 2023 2021 2022 2023 Fishmeal (tons) Fish oil (tons) Fish oil y
Slide 32: Fishmeal & Fish Oil (US)
FISHMEAL & FISH OIL (US) OPERATIONAL PERFORMACE 32
Slide 33: Fishmeal & Fish Oil (USA) Performance
FISHMEAL & FISH OIL (USA) PERFORMANCE R’ million 2023 2022 VAR FMO (USA) - PERFORMANCE DRIVERS Revenue 2 697 1 946 38.6% • Operating profit improved by 30% in USD terms Operating Profit 810 584 38.7% OP margin 30.0% 30.0% 0.0% • Gulf Menhaden landings 5% lower to 671 million fish. USD’million Below
Slide 34: Fishmeal & Fish Oil (USA): 3 Year KPIs
FISHMEAL & FISH OIL (USA) : 3 YEAR KPIs PRODUCTION FISH OIL VOLUMES / PRICE 80 000 12.0% 20 000 6 000 70 000 10.4% 18 000 10.0% 16 000 5 000 60 000 10.7% 8.1% 14 000 4 000 8.0% 50 000 12 000 40 000 6.0% 10 000 3 000 30 000 8 000 4.0% 6 000 2 000 20 000 4 000 1 000 2.0% 10 000 2 000 - 0.0% - - 2021 2
Slide 35: Peru – 2023 Supply Shortage
PERU – 2023 SUPPLY SHORTAGE PERU ANCHOVY LANDINGS * PERU OVERVIEW 6,000 5,000 • Historically has provided c. 20% of global annual supply 4,000 of fishmeal & fish oil – its prices have therefore become the 3,000 reference price for marine ingredients global industry 2,000 1,000 • Healthy anchovy biom
Slide 36: Global Fisheries Production
GLOBAL FISHERIES PRODUCTION Million MT 200 182 Share Vs 5-year avg 175 150 125 91 50% +2 AQUACULTURE 100 75 50 WILD CAPTURE 91 50% -2 25 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 202 1 36 Source: FAO Fishery Statistics
Slide 37: Global Market Outlook – Demand
GLOBAL MARKET OUTLOOK – DEMAND CHANGES IN FISHMEAL USE GLOBAL DEMAND TRENDS 120% 100% Fishmeal • India, Vietnam and Peru are the biggest exporters of fishmeal 80% • China is the biggest importer of fishmeal 60% • Aquaculture is fastest growing sector in terms of 40% 76% consumption 20% 37% 0% 2% 11%
Slide 38: Focus on Sustainability
FOCUS ON SUSTAINABILITY LEVEL BBB-EE 1 for five years in a row 38
Slide 39: Outlook & Strategy
OUTLOOK & STRATEGY 04 Neville Brink 39
Slide 40: Outlook for 2024
OUTLOOK FOR 2024 CANNED FISH / FMO (AFRICA) FISHMEAL AND OIL (US) WILD CAUGHT GROW CONSUMPTION / EXPAND THE BRAND OPTIMISE CAPACITY & EFFICIENCY FLEET INVESTMENT • Cautious of pressure on SA consumer • Season landings down 5.5% but above • Improved East Coast catch rates with 5-year average easing L
Slide 41: Canned Meat Factory
CANNED MEAT FACTORY a... 2 & JUCKY STAR JUCKY STAR RCE
Slide 42: West Coast Fishmeal Plant & Cannery Upgrade
WEST COAST FISHMEAL PLANT & CANNERY UPGRADE DEMOLISHING THE CURRENT FISHMEAL PLANT FISHMEAL PLANT UPGRADE CANNERY UPGRADE NEW BOILER 42
Slide 43: Oceana Pillars - Strategy
OCEANA PILLARS - STRATEGY 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
Slide 44: 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 45: Questions
QUESTIONS 05 Neville Brink & Zaf Mahomed 45
Slide 46: Appendices
APPENDICES 46
Slide 47: Statement of Comprehensive Income Overview
STATEMENT OF COMPREHENSIVE INCOME OVERVIEW * R’ million 2023 2022 VAR 1. Strong demand for affordable protein increased consumption and sales volumes. Revenue also benefitted from improved Revenue 1 9 987 8 148 22.6% pricing across all products, particularly for fish oil, and the Gross profit 2 2 85
Slide 48: Discontinued Operations Overview
DISCONTINUED OPERATIONS OVERVIEW • The Group entered into an agreement to dispose of its cold • Operating profit for segmental disclosure differs to that for storage business, Commercial Cold Storage Group Limited (“CCS discontinued operation disclosure due to intercompany Logistics”) in the Septemb
Slide 49: Statement of Financial Position Overview
STATEMENT OF FINANCIAL POSITION OVERVIEW R’ million 2023 2022 VAR 1. Mainly goodwill, intellectual property and trademarks arising from the Daybrook acquisition. Increase relates to higher Property, plant & equipment 2 241 1 949 15.0% exchange rate translation Intangible assets 1 6 077 5 846 4.0% 2.
Slide 50: 2023 Key Performance Indicators
2023 KEY PERFORMANCE INDICATORS Segment KPI Unit 2023 2022 VAR CANNED FISH Revenue R million 4 558 3 804 19.8% (Lucky Star) Sales volumes 000 cartons 9 612 8 818 9.0% Pilchard quota (own & contracted) tons 14 670 9 810 50.0% Pilchard landings tons 14 005 6 759 107.2% Own cartons produced 000 cartons
Slide 51: 2023 Key Performance Indicators
2023 KEY PERFORMANCE INDICATORS Segment KPI Unit 2023 2022 VAR FMO (US) Revenue USD million 146.5 116.9 25.3% (Daybrook) Menhaden landings (fiscal year) 000 fish 670 674 704 289 (4.8%) Fishmeal sales volumes tons 52 804 36 479 44.8% Fish oil sales volumes tons 12 729 17 638 (27.8%) Operating profit
Slide 52: 2023 Key Performance Indicators
2023 KEY PERFORMANCE INDICATORS Segment KPI Unit 2023 2022 VAR HAKE Revenue R million 541 515 5.0% (Daybrook) Sales volumes tons 8 086 11 687 (30.8%) Quota (own & contracted) tons 14 732 14 497 1.6% Av. Price movement Euro/ton 13% ● 4% ● Fleet utilisation % 1% ● (4%) ● Catch rates tons/day (10%) ● 4
Slide 53: Global Market Outlook – Supply
GLOBAL MARKET OUTLOOK – SUPPLY GLOBAL FISHMEAL OUTPUT * GLOBAL SUPPLY OUTLOOK • Peru anchovy biomass heathy but ocean conditions may 5 270 5 308 5 133 5 121 continue to be affected by El Niño, at least Q1 of 2024. 4 525 Improved catches & production levels anticipated • Improved production in Chile
Slide 54: Thank You
THANK YOU 54