Oceana Group Limited (OCE) investor relations material

Executive summary

• Revenue increased 2.9% year-over-year to R5.2bn, driven by higher sales in canned foods, fishmeal, fish oil, hake, and Namibian horse mackerel, but offset by lower fishmeal and fish oil prices.

• Operating profit declined 33.5% to R676m, mainly due to lower margins in the US fishmeal and fish oil segment and higher net interest expense.

• Headline earnings per share dropped 43.9% to 324.9c; interim dividend reduced to 110c per share.

• Lucky Star Foods and wild caught seafood segments delivered record sales and strong operational efficiencies, partially offsetting group profitability decline.

• Net debt to EBITDA increased to 2.2x, reflecting higher working capital and capital expenditure.

Financial highlights

• Gross profit margin decreased to 27.8% (from 34.1%), mainly due to lower fish oil prices and higher quota costs.

• Operating margin fell to 13.0% (from 20.2%); profit after tax declined 43.7% to R402m.

• Interest expense rose 54.8% due to increased borrowings for capex and working capital.

• Cash generated from operations dropped to R10m from R634m, reflecting higher working capital and lower operating profit.

• Capital expenditure for H1 was R183m, mainly for fleet upgrades; full-year capex expected at R342m.

Outlook and guidance

• Lucky Star Foods expected to maintain strong volume growth, expand brand and product range, and focus on export growth.

• Continued focus on operational efficiencies, cost control, and maximizing throughput in factories and vessels.

• Wild caught seafood to optimize vessel utilization, leverage improved catch rates, and commission new squid catamaran.

• Fishmeal and oil pricing expected to remain subdued in the short term; long-term demand outlook remains positive.

• Inventory unwind in the second half expected to reduce short-term borrowings and support cash generation.