Oceana Group Limited · JSE:OCE
Oceana — FY2013 Earnings Presentation
74 slides from Oceana's earnings presentation, 2013
Slide 1: 2013 Annual Results Presentation
2013 annual results presentation 2013 Annual Results Presentation Oceana Group 2013 annual results presentation
Slide 2: Agenda
Agenda Group Overview Financial Operational & Review Review Results Summary Oceana Group 2013 annual results presentation
Slide 3: The Oceana Group
The Oceana Group …is the largest Incorporated in 1918 fishing company in Important provider of food security with a significant Africa and is listed on protein footprint in Africa both the 3,706 Employees of which 3,275 are directly employed Johannesburg and Namibian stock Level 2 B-BBEE contributor
Slide 4: Group overview
Group overview Oceana Group 2013 annual results presentation
Slide 5: Group overview: revenue & profit splits
Group overview: revenue & profit splits 5 Year average 7% 13% 35% 30% 55% 48% 8% 5% Revenue Operating profit Canned fish Lobster, squid Horse mackerel CCS & fishmeal & french fries & hake Oceana Group 2013 annual results presentation
Slide 6: 2013 Performance
2013 Performance Overall group shows good growth despite tough trading conditions in H2 Significant growth in Horse Mackerel and Hake Bolstered by solid performances in Lobster and CCS Offset by profit decline in Canned fish and Fishmeal Results influenced by: SA protein consumption decl
Slide 7: Financials
Financials Group Revenue ZAR'm 4 997 CAGR 11% 4 648 3 657 3 301 3 423 8% 2009 2010 2011 2012 2013 487.9 CAGR 15% 455.7 HEPS (cents) 333.6 315.2 279.4 7% 2009 2010 2011 2012 2013 Oceana Group 2013 annual results presentation
Slide 8: Agenda
Agenda Group Overview Financial Operational & Review Review Results Summary Oceana Group 2013 annual results presentation
Slide 9: Summary
Summary Earnings growth shows benefit of diversified portfolio Revenue growth in all four business units Profitability impacted primarily by volumes Share price has significant impact on income statement Financial position remains strong Working capital impacted in the short term Retai
Slide 10: Financial review
Financial review Group income statement 2013 2012 R’000 R’000 % Revenue 4 997 354 4 647 951 8% Gross profit 1 948 132 1 772 186 10% GP margin 39.0% 38.1% 2% Operating profit 748 679 711 025 5% Operating profit margin 15.0% 15.3% -2% Net financing costs (10 282) (3 108) Headline earnings 489 325 456
Slide 11: Group revenue: movement
Group revenue: movement 46 24 205 74 4 997 Increase 4 648 September 2012 Canned fish and Horse mackerel Lobster, squid, CCS September 2013 fishmeal and hake french fries Oceana Group 2013 annual results presentation
Slide 12: Group revenue: contribution
Group revenue: contribution 5000 Rm's 7% 4500 7% 4000 6% 8% 3500 6% 7% 33% 8% 3000 9% 31% 2500 32% 27% 2000 1500 58% 54% 56% 53% 1000 500 0 2009 2010 2011 2012 2013 Canned fish and fishmeal Horse mackerel and hake LSF CCS Oceana Group 2013 annual results presentation
Slide 13: Group revenue: regional
Group revenue: regional 6% 4% 20% 69% 1% Oceana Group 2013 annual results presentation
Slide 14: Group operating profit: movement
Group operating profit: movement R'm 17 99 126 6 749 711 September 2012 Canned fish and Horse Mackerel & Lobster, Squid & Fries CCS September 2013 fismeal Hake Increase Decrease Oceana Group 2013 annual results presentation
Slide 15: Group operating profit: contribution
Group operating profit: contribution 700 Rm's 11% 600 9% 500 10% 400 16% 42% 56% 300 41% 53% 200 100 38% 34% 45% 29% 0 2009 2010 2011 2012 2013 Canned fish & fishmeal Horse mackerel & hake Lobster, squid, french fries CCS Logistics Oceana Group 2013 annual results presentation
Slide 16: Group volume & price analysis
Group volume & price analysis 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2009 2010 2011 2012 2013 -5% Sales volumes SP per ton CP per ton Oceana Group 2013 annual results presentation
Slide 17: Share price & share costs effect
Share price & share costs effect Share based costs of R152.4m for F’13 (F’12: R75m): 56% increase in share price Oceana Group 2013 annual results presentation
Slide 18: Financial position
Financial position Group financial position 2013 2012 R’000 R’000 R500 m increase in Property, plant and equipment 473 821 435 850 inventory of Intangible assets canned fish 102 802 88 638 Deferred taxation 30 360 23 187 Investments and loans 118 424 142 940 Current assets 2 046 182 1 601 935 Stock
Slide 19: Return on equity and net assets
Return on equity and net assets 45% 41% 39% 38% 37% 31% 30% 27% 27% 26% 2009 2010 2011 2012 2013 Return on net assets Return on shareholders funds Oceana Group 2013 annual results presentation
Slide 20: Headline earnings and dividends
Headline earnings and dividends 488 456 334 322 315 301 279 208 220 184 2009 2010 2011 2012 2013 HEPS DPS 1.5 times dividend cover Oceana Group 2013 annual results presentation
Slide 21: Agenda
Agenda Group Overview Financial Operational & Review Review Results Summary Oceana Group 2013 annual results presentation
Slide 22: Operational review: Canned fish and fishmeal
Operational review: Canned fish and fishmeal
Slide 23: Canned fish and fishmeal: overview
Canned fish and fishmeal: overview Catch Procurement Canned fish sales Fishmeal sales Oceana Group 2013 annual results presentation
Slide 24: Canned fish: performance
Canned fish: performance Sales volumes: YOY volume decline of 1.2% - Growth of 16% in H1 offset in H2 by destocking at major customers and reduction in protein consumption patterns by consumers Oceana Group 2013 annual results presentation
Slide 25: Canned fish: sales volumes
Canned fish: sales volumes 5.6m 6.0m 7.3m 8.7m 8.6m cartons cartons cartons cartons cartons 44% 53% 50% 52% 56% H2 H1 56% 47% 50% 48% 44% 2009 2010 2011 2012 2013 Oceana Group 2013 annual results presentation
Slide 26: Canned fish: trade destocking
Canned fish: trade destocking Canned fish stock levels 51% 50% 49% 52% Retailer A Retailer B Wholesaler A Wholesaler B March April May June July Aug Sept Oct Jan 5%, Feb 15%, Mar 16% YTD on 2012 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2013 2012 2011 Canned fish sales volumes Oceana Group
Slide 27: Canned fish: retail protein volumes
Canned fish: retail protein volumes Nielsen Retail Scanning Basket Volume Growth Unit Share 12MM 6MM 3MM Protein 39.0% 0.4% -0.2% 2.3% Red Meat 11.9% 6.2% 8.5% 9.2% IQF Chicken 6.5% -1.9% -4.3% 0.5% Chilled Processed Meat 5.9% -3.9% -4.9% -3.1% Baked Beans 5.2% 5.7% 7.6% 4.4% Whole Chicken 3.2% -6.7
Slide 28: Canned fish: performance
Canned fish: performance Sales volumes: YOY volume decline of 1.2% - Growth of 16% in H1 offset in H2 by destocking at major customers and reduction in protein consumption patterns by consumers Supply Improved catch levels and production yields in 2013 Quota • SA – 13,508 owned, 16,215 con
Slide 29: Canned fish: supply analysis (cartons)
Canned fish: supply analysis(cartons) 10 % growth in imports to meet projected demand 17 % growth in own production due to good catches and improved yields 6539 5922 4091 2793 3897 3577 2985 3063 2125 2074 2009 2010 2011 2012 2013 Own production Other SA Imports Oceana Group 2013 annual results pres
Slide 30: Canned fish: performance
Canned fish: performance Sales volumes: YOY volume decline of 1.2% - Growth of 16% in H1 offset in H2 by destocking at major customers and reduction in protein consumption patterns by consumers Supply Improved catch levels and production yields in 2013 Quota • SA – 13,508 owned, 16,215 con
Slide 31: Canned fish: volumes, price and profitability
Canned fish: volumes, price and profitability 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 2013 -10% -20% Sales volumes SP per ctn CP per ctn Comparatives indexed to 2009 Oceana Group 2013 annual results presentation
Slide 32: Canned fish: performance
Canned fish: performance Sales volumes: YOY volume decline of 1.2% - Growth of 16% in H1 offset in H2 by destocking at major customers and reduction in protein consumption patterns by consumers Supply Improved catch levels and production yields in 2013 Quota • SA – 13,508 owned, 16,215 con
Slide 33: Canned fish: stock levels
Canned fish: stock levels 350% 300% 250% 200% 150% 100% 50% 0% H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 Comparatives indexed to 2009 Oceana Group 2013 annual results presentation
Slide 34: Canned fish: import supply chain
Canned fish: import supply chain 85 days Frozen fish Catching Canning sea voyage 17 days 17 days 51 days 163 days Release and Canned fish Customer transport to sea voyage delivery warehouse 30 days 10 days 38 days Oceana Group 2013 annual results presentation
Slide 35: Canned fish: inventory reduction
Canned fish: inventory reduction 350% 300% Reduce to 90 days – 250% reduction takes long lead times 200% into account 150% 100% 50% 0% H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 Oceana Group 2013 annual results presentation
Slide 36: Canned fish: performance
Canned fish: performance Sales volumes: YOY volume decline of 1.2% - Growth of 16% in H1 offset in H2 by destocking at major customers and reduction in protein consumption patterns by consumers Supply Improved catch levels and production yields in 2013 Quota • SA – 13,508 owned, 16,215 con
Slide 37: Canned fish: outlook
Canned fish: outlook Domestic growth will remain under pressure due to economic environment Price increase planned for 2014 – remains to be seen whether market can absorb this Expect further penetration into African markets – Nigeria, Mozambique, Zimbabwe Reduction in inventory levels and po
Slide 38: Fishmeal: performance
Fishmeal: performance Weather patterns have affected landings due to impact on fishing Fishmeal: Outlook Oceana Group 2013 annual results presentation
Slide 39: Fishmeal: different fishing methods
Fishmeal: different fishing methods Oceana Group 2013 annual results presentation
Slide 40: Fishmeal: performance
Fishmeal: performance Weather patterns have affected landings due to impact on fishing Profitability severely impacted by reduction in industrial fish landings 50 year industrial landings review Outlook Fishmeal: Oceana landings 5 years Oceana Group 2013 annual results presentation
Slide 41: Fishmeal: 50 year industrial landings review
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Slide 42: Fishmeal: Oceana 5 year landings
Fishmeal: Oceana 5 year landings tons 129 276 123 423 105 360 87 919 36 780 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2009 2010 2011 2012 2013 Oceana Group 2013 annual results presentation
Slide 43: Fishmeal: performance
Fishmeal: performance Weather patterns have affected landings due to impact on fishing Profitability severely impacted by reduction in industrial fish landings 50 year industrial landings review Outlook Fishmeal: Oceana landings 5 years Volumes, price and costs per ton analysis Oceana Grou
Slide 44: Fishmeal: volumes, price and profitability
Fishmeal: volumes, price and profitability Landings Price per ton Cost per ton 100% 80% 60% 40% 20% 0% -20% 2009 2010 2011 2012 2013 -40% -60% -80% Oceana Group 2013 annual results presentation
Slide 45: Fishmeal: performance
Fishmeal: performance Weather patterns have affected landings due to impact on fishing Profitability severely impacted by reduction in industrial fish landings 50 year industrial landings review Outlook Fishmeal: Oceana landings 5 years Volumes, price and costs per ton analysis 2014 outl
Slide 46: Fishmeal: outlook
Fishmeal: outlook Improved industrial landings expected Pricing to remain favourable Operational efficiencies to be implemented at low activity sites Fishmeal: Outlook Oceana Group 2013 annual results presentation
Slide 47: Operational review: Horse mackerel & hake
Operational review: Horse mackerel & hake 2 Operational review Horse mackerel and hake
Slide 48: Horse mackerel & hake: overview
Horse mackerel & hake: overview Catch Horse Mackerel sales Hake sales Oceana Group 2013 annual results presentation
Slide 49: Horse mackerel: performance
Horse mackerel: performance Good growth in operating profit Supply Reduction in Namibian quota by 19% offset by good catch rates Increase in SA quota by 10% in addition to improved catch rates Oceana Group 2013 annual results presentation
Slide 50: Horse mackerel: performance
Horse mackerel: performance Good growth in operating profit Supply Reduction in Namibian quota by 19% offset by good catch rates Increase in SA quota by 10% in addition to improved catch rates Volumes Horse mackerel sales volumes directly linked to supply As a result SA revenues improv
Slide 51: Horse mackerel: volumes, price and profitability
Horse mackerel: volumes, price and profitability Catch per day Price per ton Cost per ton 120% 100% 80% 60% 40% 20% 0% -20% 2009 2010 2011 2012 2013 -40% Oceana Group 2013 annual results presentation
Slide 52: Hake: performance
Hake: performance Significant growth in operating profit Supply Increase in TAC of 7.8% Additional quota from Lusitania acquisition Volumes Overall sales volumes improved to 9,396 tons (2012: 3,800 tons) Pricing Good pricing in all markets bolstered by favourable exchange rate Oceana
Slide 53: Hake: volumes, price and profitability
Hake: volumes, price and profitability 350% Sales volumes Price per ton Cost per ton 300% 250% 200% 150% 100% 50% 0% -50% 2009 2010 2011 2012 2013 Oceana Group 2013 annual results presentation
Slide 54: Horse mackerel & hake: outlook
Horse mackerel & hake: outlook Horse mackerel Reduction in Namibian quota, no change in SA Pricing levels difficult to predict Exploring Angolan opportunities – project commenced in 2013 starting to show promise Hake No change in quota Consistent pricing levels Improved catch levels
Slide 55: Operational Review: Lobster, squid & french fries
Operational Review: Lobster, squid & french fries
Slide 56: Lobster, squid & fries: overview
Lobster, squid & fries: overview Catch Lobster sales Squid sales French fries Oceana Group 2013 annual results presentation
Slide 57: Lobster: performance
Lobster: performance Growth in operating profit for 2013 Volumes Steady demand in key markets Growth in live lobster products Supply TAC unchanged in 2013 Full quota allocated landed Pricing Improved pricing in most markets Positively impacted by exchange rate Oceana Group 2013 a
Slide 58: Lobster: volumes, price and profitability
Lobster: volumes, price and profitability 40% 35% 30% 25% 20% 15% 10% 5% 0% 2009 2010 2011 2012 2013 Sales volumes Price per ton Cost per ton Oceana Group 2013 annual results presentation
Slide 59: Squid: performance
Squid: performance Further losses in squid business for 2013 Supply Lower industry catch rates in 2013 Our catch rates declined by 25% Pricing Consistent pricing in most markets Positively impacted by exchange rate Oceana Group 2013 annual results presentation
Slide 60: Squid: supply – 7 year landings
Squid: supply – 7 year landings 11 446 10 995 9 176 8 900 8 679 6 301 4 726 estimated 2007 2008 2009 2010 2011 2012 2013 Total industry landings (tons) Oceana Group 2013 annual results presentation
Slide 61: Squid: volumes, price and profitability
Squid: volumes, price and profitability Sales volumes Price per ton Cost per ton 100% 80% 60% 40% 20% 0% -20% 2009 2010 2011 2012 2013 -40% -60% -80% Oceana Group 2013 annual results presentation
Slide 62: French fries: performance
French fries: performance Operating loss in 2013 Volumes Strong volumes in QSR market Supply Production input marginally increased Offset by poor potato quality in the first quarter, resulting in lower yields Pricing Positively impacted by import duty in latter part of the year Ocean
Slide 63: French fries: volumes, price and profitability
French fries: volumes, price and profitability 30% 20% 10% 0% -10% 2009 2010 2011 2012 2013 -20% -30% Sales volumes Price per ton Cost per ton Oceana Group 2013 annual results presentation
Slide 64: Lobster, squid & french fries: outlook
Lobster, squid & french fries: outlook Lobster Reduction in quota expected Strong pricing levels should remain Squid Performance will be impacted by resource availability Steady demand still expected French fries Plant at full capacity Pricing still favourable in light of import ta
Slide 65: Operational Overview: CCS Logistics
Operational Overview: Operational Overview: CCS CCSLogistics Logistics
Slide 66: CCS: overview
CCS: overview Cold stores Oceana Group 2013 annual results presentation
Slide 67: CCS: performance
CCS: performance Significant improvement in profitability in 2013 Revenue Improved due to additional storage capacity Bolstered by higher occupancy levels Strong customer focus delivering returns Operating costs Continued focus on efficiencies has yielded positive results Offset by e
Slide 68: CCS: volumes, price and profitability
CCS: volumes, price and profitability 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% 2009 2010 2011 2012 2013 -10% Pallets handled Revenue/pallet Cost/pallet Oceana Group 2013 annual results presentation
Slide 69: CCS: Outlook
CCS: Outlook Expansion in Walvis Bay New site in Midrand Small site in Angola Continued focus on customer service and volume throughput Oceana Group 2013 annual results presentation
Slide 70: Looking Ahead
LOOKING AHEAD
Slide 71: Foodcorp transaction
Foodcorp transaction Foodcorp acquisition approved by the Competition Commission on 29 October 2013 Subject to two conditions: • Divestiture of the Glenryck brand • Divestiture of pilchard quota (in order to support the Glenryck brand) First condition was expected Second condition will be jo
Slide 72: Foodcorp transaction
Foodcorp transaction Brands with local quota losing share to procurers and importers (Lucky Star & House brands). Oceana Group 2013 annual results presentation
Slide 73: Foodcorp transaction
Foodcorp transaction Foodcorp acquisition approved by the Competition Commission on 29 October 2013 Subject to two conditions: • Divestiture of the Glenryck brand • Divestiture of pilchard quota (in order to support the Glenryck brand) First condition was expected Second condition will be jo
Slide 74: Oceana Empowerment Trust
Oceana Empowerment Trust Oceana Empowerment Trust currently holds 11.7% of Oceana shares Established to enable Oceana to facilitate direct participation to existing and future black employees and simultaneously to secure an increased direct broad-based black shareholding Current lock-in period