2013 Annual Results Presentation Oceana Group 2013 annual results - - PowerPoint PPT Presentation

Oceana Group 2013 annual results presentation

2013 annual results presentation

2013 Annual Results Presentation

Oceana Group 2013 annual results presentation

Group Overview & Results Summary Financial Review Operational Review

Agenda

Oceana Group 2013 annual results presentation Oceana Group 2013 annual results presentation

Incorporated in 1918 Important provider of food security with a significant protein footprint in Africa 3,706 Employees of which 3,275 are directly employed Level 2 B-BBEE contributor, rated 2nd most empowered company in SA (M&G) 3m Lucky Star servings per day in Africa

…is the largest

fishing company in Africa and is listed on both the Johannesburg and Namibian stock exchanges…

Trade over 250,000 tons of product each year 1.4m estimated servings of horse mackerel per day in Africa

The Oceana Group

Oceana Group 2013 annual results presentation

Group overview

Oceana Group 2013 annual results presentation

55% 8% 30% 7%

Revenue

35% 5% 48% 13%

Operating profit

Canned fish & fishmeal Lobster, squid & french fries Horse mackerel & hake CCS

Group overview: revenue & profit splits

5 Year average

Oceana Group 2013 annual results presentation

 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 decline in H2
• Destocking of canned fish by major trade customers
• Industrial fish landings lowest in decades
• Weaker R/$ exchange rate
• Impact of share price on accounting results

 Solid base for good growth into 2014

2013 Performance

Oceana Group 2013 annual results presentation

8%

CAGR 11%

7%

CAGR 15% 3 301 3 423 3 657 4 648 4 997

2009 2010 2011 2012 2013

Group Revenue ZAR'm

279.4 315.2 333.6 455.7 487.9

2009 2010 2011 2012 2013

HEPS (cents)

Financials

Oceana Group 2013 annual results presentation

Group Overview & Results Summary Financial Review Operational Review

Agenda

Oceana Group 2013 annual results presentation

 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  Retained dividend cover

Summary

Oceana Group 2013 annual results presentation

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 489 325 456 158 7% HEPS (cents) 488 456 7%

Financial review

Oceana Group 2013 annual results presentation

4 648 74 205 24 46 4 997 September 2012 Canned fish and fishmeal Horse mackerel and hake Lobster, squid, french fries CCS September 2013 Increase

Group revenue: movement

Oceana Group 2013 annual results presentation 500 1000 1500 2000 2500 3000 3500 4000 4500 5000

2009 2010 2011 2012 2013

Rm's

Canned fish and fishmeal Horse mackerel and hake LSF CCS 53% 7% 7% 33% 56% 8%

7%

31% 58% 54% 32% 27% 9% 8%

6% 6%

Group revenue: contribution

Oceana Group 2013 annual results presentation

egional

6% 69% 20% 1% 4%

Group revenue: regional

Oceana Group 2013 annual results presentation

711 99 126 6 17 749

September 2012 Canned fish and fismeal Horse Mackerel & Hake Lobster, Squid & Fries CCS September 2013 R'm

Increase Decrease

Group operating profit: movement

Oceana Group 2013 annual results presentation 100 200 300 400 500 600 700

2009 2010 2011 2012 2013

Rm's

Canned fish & fishmeal Horse mackerel & hake Lobster, squid, french fries CCS Logistics 45% 9% 42% 56% 11% 29% 38% 34% 41% 53% 16% 10%

Group operating profit: contribution

Oceana Group 2013 annual results presentation

• 5%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

2009 2010 2011 2012 2013 Sales volumes SP per ton CP per ton

Group volume & price analysis

Oceana Group 2013 annual results presentation

Share based costs

• f R152.4m for

F’13 (F’12: R75m): 56% increase in share price

Share price & share costs effect

Oceana Group 2013 annual results presentation

Group financial position

2013 2012 R’000 R’000 Property, plant and equipment 473 821 435 850 Intangible assets 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 days 127 90 Net cash

• 231 604

Total assets 2 771 589 2 524 154 Shareholders interest 1 789 375 1 633 242 Deferred taxation 39 797 41 843 Other liabilities 772 441 849 069 Net overdrafts 169 976 - Total equity and liabilities 2 771 589 2 524 154

R500 m increase in inventory of canned fish R400 m movement in cash balances

Financial position

Oceana Group 2013 annual results presentation

37% 39% 38% 45% 41% 27% 27% 26% 31% 30% 2009 2010 2011 2012 2013 Return on net assets Return on shareholders funds

Return on equity and net assets

Oceana Group 2013 annual results presentation

279 315 334 456 488 184 208 220 301 322 2009 2010 2011 2012 2013

HEPS DPS 1.5 times dividend cover

Headline earnings and dividends

Oceana Group 2013 annual results presentation

Group Overview & Results Summary Financial Review Operational Review

Agenda

Canned fish and fishmeal

Operational review:

Oceana Group 2013 annual results presentation

Canned fish sales Fishmeal sales Catch Procurement

Canned fish and fishmeal: overview

Oceana Group 2013 annual results presentation

 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

Canned fish: performance

Oceana Group 2013 annual results presentation

44% 47% 50% 48% 56% 56% 53% 50% 52% 44%

2009 2010 2011 2012 2013

H2 H1

5.6m cartons 6.0m cartons 7.3m cartons 8.7m cartons 8.6m cartons

Canned fish: sales volumes

Oceana Group 2013 annual results presentation Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Canned fish sales volumes

2013 2012 2011

Retailer A Retailer B Wholesaler A Wholesaler B

Canned fish stock levels

March April May June July Aug Sept Oct

51% 49% 50% 52% Jan 5%, Feb 15%, Mar 16% YTD on 2012

Canned fish: trade destocking

Oceana Group 2013 annual results presentation

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%
• 8.1%
• 4.2%

Lucky Star Pilchards 3.0% 4.1%

• 2.8%
• 6.4%

All Other Pilchards 1.2%

• 12.4% -12.4%
• 5.9%

Canned Meat 1.1%

• 5.9%
• 2.8%
• 6.1%

Frozen Fish 1.1% 1.7% 0.2%

• 0.2%

Other 33.7% 2.7% 1.8% 0.4% Carbs 27.3%

• 0.8%
• 1.3%
• 1.5%

Grand Total 100% 0.9% 0.2% 0.3% Nielsen Retail Scanning Basket Volume Growth

Canned fish: retail protein volumes

Oceana Group 2013 annual results presentation

 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 contracted (TAC 90,000t)
• Namibia – 7,975 owned, 4,149 contracted (TAC 25,000t)
• Further 60% sourced from 14 canneries. Increase of 10% in imported

volumes to meet projected demand

Canned fish: performance

Oceana Group 2013 annual results presentation

10 % growth in imports to meet projected demand 17 % growth in own production due to good catches and improved yields

2125 2074 2985 3063 3577 4091 3897 2793 5922 6539 2009 2010 2011 2012 2013 Own production Other SA Imports

Canned fish: supply analysis(cartons)

Oceana Group 2013 annual results presentation

 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 contracted (TAC 90,000t)
• Namibia – 7,975 owned, 4,149 contracted (TAC 25,000t)
• Further 60% sourced from 14 canneries. Increase of 10% in imported

volumes to meet projected demand  Profitability in 2013 impacted by lower volumes and weaker exchange rate

Canned fish: performance

Oceana Group 2013 annual results presentation

• 20%
• 10%

0% 10% 20% 30% 40% 50% 60% 2009 2010 2011 2012 2013 Sales volumes SP per ctn CP per ctn Comparatives indexed to 2009

Canned fish: volumes, price and profitability

Oceana Group 2013 annual results presentation

 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 contracted (TAC 90,000t)
• Namibia – 7,975 owned, 4,149 contracted (TAC 25,000t)
• Further 60% sourced from 14 canneries. Increase of 10% in imported

volumes to meet projected demand  Profitability in 2013 impacted by lower volumes and weaker exchange rate  Inventory

• YOY increase of 82% in cartons held
• Long lead time in supply chain impacts ability to reduce stock levels

in the short term

Canned fish: performance

Oceana Group 2013 annual results presentation

0% 50% 100% 150% 200% 250% 300% 350% H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013

Comparatives indexed to 2009

Canned fish: stock levels

Oceana Group 2013 annual results presentation

Catching 17 days Frozen fish sea voyage 51 days Canning 17 days Canned fish sea voyage 30 days Release and transport to warehouse 38 days Customer delivery 10 days

85 days 163 days

Canned fish: import supply chain

Oceana Group 2013 annual results presentation

0% 50% 100% 150% 200% 250% 300% 350% H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014

Reduce to 90 days – reduction takes long lead times into account

Canned fish: inventory reduction

Oceana Group 2013 annual results presentation

 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 contracted (TAC 90,000t)
• Namibia – 7,975 owned, 4,149 contracted (TAC 25,000t)
• Further 60% sourced from 14 canneries. Increase of 10% in imported

volumes to meet projected demand  Profitability in 2013 impacted by lower volumes and weaker exchange rate  Inventory

• YOY increase of 82% in cartons held
• Long lead time in supply chain impacts ability to reduce stock levels

in the short term  2014 outlook

Canned fish: performance

Oceana Group 2013 annual results presentation

 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 positive impact on working capital

Canned fish: outlook

Oceana Group 2013 annual results presentation

Fishmeal: Outlook

 Weather patterns have affected landings due to impact on fishing

Fishmeal: performance

Oceana Group 2013 annual results presentation

Fishmeal: different fishing methods

Oceana Group 2013 annual results presentation

Fishmeal: Outlook

 Weather patterns have affected landings due to impact on fishing  Profitability severely impacted by reduction in industrial fish landings

• 50 year industrial landings review
• Oceana landings 5 years

Fishmeal: performance

Oceana Group 2013 annual results presentation

• 50 000

100 000 150 000 200 000 250 000 300 000 350 000 400 000 450 000 500 000 550 000 600 000 650 000 700 000

1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Jul 13

Fishmeal: 50 year industrial landings review

Oceana Group 2013 annual results presentation 105 360 123 423 87 919 129 276 36 780

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2009 2010 2011 2012 2013 tons

Fishmeal: Oceana 5 year landings

Oceana Group 2013 annual results presentation

Fishmeal: Outlook

 Weather patterns have affected landings due to impact on fishing  Profitability severely impacted by reduction in industrial fish landings

• 50 year industrial landings review
• Oceana landings 5 years

 Volumes, price and costs per ton analysis

Fishmeal: performance

Oceana Group 2013 annual results presentation

• 80%
• 60%
• 40%
• 20%

0% 20% 40% 60% 80% 100%

2009 2010 2011 2012 2013 Landings Price per ton Cost per ton

Fishmeal: volumes, price and profitability

Oceana Group 2013 annual results presentation

Fishmeal: Outlook

 Weather patterns have affected landings due to impact on fishing  Profitability severely impacted by reduction in industrial fish landings

• 50 year industrial landings review
• Oceana landings 5 years

 Volumes, price and costs per ton analysis  2014 outlook

Fishmeal: performance

Oceana Group 2013 annual results presentation

 Improved industrial landings expected  Pricing to remain favourable  Operational efficiencies to be implemented at low activity sites

Fishmeal: Outlook

Fishmeal: outlook

Horse mackerel and hake

2 Operational review

Operational review:

Horse mackerel & hake

Oceana Group 2013 annual results presentation

Horse Mackerel sales Hake sales Catch

Horse mackerel & hake: overview

Oceana Group 2013 annual results presentation

 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

Horse mackerel: performance

Oceana Group 2013 annual results presentation

 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 improved on prior year, while

Namibia revenue showed marginal decline  Pricing

• Remained firm in major markets bolstered by favourable

exchange rate

• Improved pricing for certain sizes

Horse mackerel: performance

Oceana Group 2013 annual results presentation

• 40%
• 20%

0% 20% 40% 60% 80% 100% 120%

2009 2010 2011 2012 2013 Catch per day Price per ton Cost per ton

Horse mackerel: volumes, price and

profitability

Oceana Group 2013 annual results presentation

 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

Hake: performance

Oceana Group 2013 annual results presentation

• 50%

0% 50% 100% 150% 200% 250% 300% 350%

2009 2010 2011 2012 2013 Sales volumes Price per ton Cost per ton

Hake: volumes, price and profitability

Oceana Group 2013 annual results presentation

 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 and vessel efficiencies should

reduce catch costs

Horse mackerel & hake: outlook

Operational Review:

Lobster, squid & french fries

Oceana Group 2013 annual results presentation

Lobster sales Squid sales Catch French fries

Lobster, squid & fries: overview

Oceana Group 2013 annual results presentation

 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

Lobster: performance

Oceana Group 2013 annual results presentation

0% 5% 10% 15% 20% 25% 30% 35% 40%

2009 2010 2011 2012 2013 Sales volumes Price per ton Cost per ton

Lobster: volumes, price and profitability

Oceana Group 2013 annual results presentation

 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

Squid: performance

Oceana Group 2013 annual results presentation

8 900 9 176 11 446 10 995 8 679 6 301 4 726 2007 2008 2009 2010 2011 2012 2013 Total industry landings (tons) estimated

Squid: supply – 7 year landings

Oceana Group 2013 annual results presentation

• 80%
• 60%
• 40%
• 20%

0% 20% 40% 60% 80% 100%

2009 2010 2011 2012 2013 Sales volumes Price per ton Cost per ton

Squid: volumes, price and profitability

Oceana Group 2013 annual results presentation

 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

French fries: performance

Oceana Group 2013 annual results presentation

• 30%
• 20%
• 10%

0% 10% 20% 30%

2009 2010 2011 2012 2013 Sales volumes Price per ton Cost per ton

French fries: volumes, price and profitability

Oceana Group 2013 annual results presentation

 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 tariff
• Extract efficiencies to deliver growth

Lobster, squid & french fries: outlook

Operational Overview:

CCS Logistics

Operational Overview:

CCS Logistics

Oceana Group 2013 annual results presentation

Cold stores

CCS: overview

Oceana Group 2013 annual results presentation

 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 electricity tariff increases

CCS: performance

Oceana Group 2013 annual results presentation

• 10%
• 5%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

2009 2010 2011 2012 2013 Pallets handled Revenue/pallet Cost/pallet

CCS: volumes, price and profitability

Oceana Group 2013 annual results presentation

 Expansion in Walvis Bay  New site in Midrand  Small site in Angola  Continued focus on customer service and volume throughput

CCS: Outlook

LOOKING AHEAD

Oceana Group 2013 annual results presentation

 Foodcorp acquisition approved by the Competition Commission on 29October 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 jointly contested by Oceana and Foodcorp via Tribunal

Foodcorp transaction

Oceana Group 2013 annual results presentation

Brands with local quota losing share to procurers and importers (Lucky Star & House brands).

Foodcorp transaction

Oceana Group 2013 annual results presentation

 Foodcorp acquisition approved by the Competition Commission on 29October 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 jointly contested by Oceana and Foodcorp via Tribunal  Timeframes being finalised – requested urgent hearing of the matter  Foodcorp and Oceana have extended the sale of business agreement to 31 January 2014

Foodcorp transaction

Oceana Group 2013 annual results presentation

 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 ends in January 2017, with significant growth already accrued  A proposal to assist beneficiaries realise a portion of this benefit immediately and to extend the lock-in period to January 2021, post the Long Term Rights Renewal process has been approved by the Board and Trustees  Beneficiaries will vote on whether to adopt the proposal and receive an advance payout or keep the status quo  Payout, if approved, will be funded by long term debt repayable by dividends from the Trust

Oceana Empowerment Trust