Oceana Group Limited · JSE:OCE
Oceana — H1 2021 Earnings Presentation
45 slides from Oceana's earnings presentation, 2021
Slide 1: Investor Presentation
2021 INVESTOR PRESENTATION PERIOD ENDED 31 MARCH 2021 POSITIVELY IMPACTING LIVES 1
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 fol
Slide 3: Introduction
INTRODUCTION PERFORMANCE OVERVIEW FINANCIALS OPERATIONAL REVIEW STRATEGIC OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 3
Slide 4: Oceana Group
Oceana Group • A diversified fish protein company • Operating primarily in SA, Namibia and USA Level 1 1st 43% OVER 45 000 R7.5bn B-BBEE most empowered female representation Direct, indirect and annual GDP • Harvesting and procuring a diverse food producer in SA workforce of induced jobs contributio
Slide 5: Diversified Operations and Earnings
DIVERSIFIED OPERATIONS AND EARNINGS 5 EUROPE Fishing NORTH 11% FAR EAST geographies AMERICA 1% 26% 40 REST OF AFRICA Customer 18% geographies EARNINGS PER REGION* SA AUSTRALIA 43% 1% 16 VESSELS 12 VESSELS & 12 PLANES 19 VESSELS 7 COLD STORAGE FACILITIES 5 PRODUCTION FACILITIES 1 PRODUCTION FACILITY
Slide 6: Diversified Operations and Earnings
DIVERSIFIED OPERATIONS AND EARNINGS FISH SUPPLY SPECIES 9% 5% 22% 33% 38% 21% 32% 40% North America Pilchard/sardines West Africa Anchovy/menhaden South Africa Horse Mackerel Namibia Hake & other *Fish supply and species data as at 30 September 2020 POSITIVELY IMPACTING LIVES 6
Slide 7: Performance Overview
INTRODUCTION PERFORMANCE OVERVIEW FINANCIALS OPERATIONAL REVIEW STRATEGIC OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 7
Slide 8: Performance Overview
PERFORMANCE OVERVIEW CUMULATIVE HEPS % CHANGE 4% ▪ Continued growth after solid 15% performance in 2020 4% ▪ Strength of diversified portfolio (8%) (18%) 10% ▪ Consistent demand for canned fish, horse mackerel and fishmeal and fish oil Base FY 17/18 FY 18/19 FY19/20 H120/21 ▪ Increased capacity in U
Slide 9: Financials
INTRODUCTION PERFORMANCE OVERVIEW FINANCIALS OPERATIONAL REVIEW STRATEGIC OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 9
Slide 10: Results Snapshot
RESULTS SNAPSHOT 1. Revenue decline driven by lower US fishmeal sales as a R'000 Notes H1 2021 % H1 2020 result of lower opening stock levels. Africa sales revenue Revenue 1 3 567 974 (2%) 3 626 514 increased by 1% due to improved horse mackerel pricing, Gross profit 1 172 097 (10%) 1 305 194 offset
Slide 11: Revenue
REVENUE REPORTED REVENUE : R’M 2% decline COVID-19 IMPACT ON REVENUE : R’M 0% growth Increase Decrease Total POSITIVELY IMPACTING LIVES 11
Slide 12: Operating Profit
OPERATING PROFIT OPERATING PROFIT : R’M 4% decline COVID-19 IMPACT ON OPERATING PROFIT : R’M 2% growth Increase Decrease Total * Includes profit on disposal of Bayhead cold storage and Empowerment transaction costs POSITIVELY IMPACTING LIVES 12
Slide 13: Foreign Exchange Impact
FOREIGN EXCHANGE IMPACT US$ NET IMPORT POSITION 2021 2021 Outflow / Import Costs Inflows / Export Revenue Import Costs Export Revenue Daybrook POSITIVELY IMPACTING LIVES 13
Slide 14: Financial Position – Key Items
FINANCIAL POSITION – KEY ITEMS Closing USD/ZAR exchange rate 16% stronger at R14.96 R’000 Notes H1 2021 H1 2020 (2020: R17.85) Property, plant & equipment* 1 1 955 358 2 116 276 1. Expansion and replacement capex of R162m incurred Intangible assets 2 4 749 231 5 666 856 (2019: R157m+ R37m Right of u
Slide 15: Working Capital Management
WORKING CAPITAL MANAGEMENT 149 Reduction in net working capital driven 138 by: ▪ Inventory: - Impact of COVID-19 supply chain disruptions on Lucky Star frozen fish supply and production levels - expected to recover during Q3 79 148 145 - 36% Lower Daybrook stock levels due to hurricane impacted FY20
Slide 16: HEPS / DPS Cents per Share
HEPS / DPS 5 YEAR HEPS / DPS TREND CAGR 8% CENTS PER SHARE 250 250 261 213 194 112 123 100 110 90 2017 2018 2019 2020 2021F HEPS (basic)cents DPS Declared 2018 excludes the once off US deferred tax benefit POSITIVELY IMPACTING LIVES 16
Slide 17: Operational Review
INTRODUCTION PERFORMANCE OVERVIEW FINANCIALS OPERATIONAL REVIEW STRATEGIC OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 17
Slide 18: Canned Fish
Canned Fish POSITIVELY IMPACTING LIVES 18
Slide 19: Canned Fish
CANNED FISH KEY PERFORMANCE INDICATORS PERFORMANCE MARCH MARCH 2020 2021 Revenue % VAR 4% 1% ▪ Canned pilchard volumes declined 5% having realised a net PI of 4% under tough trading Price increase conditions and within a constrained consumer %VAR 4% 4% environment ▪ Negative impact of global contain
Slide 20: Canned Fish - Supply
CANNED FISH - SUPPLY PORT DELIVERIES (TONS) ▪ Canned fish supply disruptions as a result of COVID lock-down restrictions across main raw fish supply geographies and exacerbated by global container shortages and port delays - impact on both availability and accessibility of raw fish Q1 Q2 Apr/May 202
Slide 21: Canned Fish - Demand
CANNED FISH - DEMAND CUMULATIVE MoM % GROWTH REGIONAL MARKET SHARE CANNED FISH SALES 6% CAGR 10 000 000 R650,00 12% 1% R600,00 9 000 000 8% R550,00 8 000 000 10% 10% R500,00 7 000 000 R450,00 8% 6 000 000 R400,00 R350,00 5 000 000 6% R300,00 4 000 000 R250,00 4% 3 000 000 R200,00 R150,00 2 000 000 2
Slide 22: Canned Fish – H2 Outlook
CANNED FISH – H2 OUTLOOK TAILWINDS HEADWINDS • Continued improvement in international • Decreased levels of disposable income raw fish supply amongst low income, high frequency consumers • Local pilchard biomass improvement – quotas issued for H2 • Growing price sensitivity of consumers • Increased
Slide 23: Fishmeal & Fish Oil
Fishmeal & Fish Oil POSITIVELY IMPACTING LIVES 23
Slide 24: Fishmeal and Fish Oil (Africa)
FISHMEAL AND FISH OIL (AFRICA) KEY PERFORMANCE INDICATORS PERFORMANCE MARCH MARCH 2020 2021 Revenue % VAR 14% 15% ▪ Production and sales volumes lower due to by-catch limitations in the initial part of the season Landings ▪ Shipping adversely impacted by container tons 20% 30% availability and cargo
Slide 25: Fishmeal and Fish Oil (Africa) - Supply and Demand
FISHMEAL AND FISH OIL (AFRICA) - SUPPLY AND DEMAND INDUSTRIAL FISH LANDINGS (TONS) VOLUMES SOLD PER REGION (MT) 80 000 70 000 60 000 UK & EUROPE 50 000 2021: 36% (2020: 60%) 40 000 FAR EAST 2021: 37% (2020: 6%) 30 000 20 000 SOUTH AMERICA 2021: 0% AFRICA (2020: 2%) 2021: 24% 10 000 (2020: 32%) - Oct
Slide 26: Fishmeal and Fish Oil (US)
FISHMEAL AND FISH OIL (US) KEY PERFORMANCE INDICATORS PERFORMANCE MARCH MARCH 2020 2021 Revenue (USD) % VAR 9% 13% ▪ Lower opening stock levels impact revenue Opening Inventory ▪ Strong demand for pet food with higher than tons 19% 36% expected offtake recorded in February and March Volumes sold ▪ O
Slide 27: Daybrook
DAYBROOK SEASON READINESS Focus on controllables - plant and catch capacity, production quality, target markets: ▪ 12th vessel deployed on 2 June – expected to deliver 10-15% volume increment ▪ Run boat concept implemented this season ▪ Focussed capex spend to improve plant capacity and availability
Slide 28: Fishmeal and Fish Oil (US & Gulf) - Supply and Demand
FISHMEAL AND FISH OIL (US & GULF) - SUPPLY AND DEMAND GULF MENHADEN LANDINGS (M’FISH) US PETFOOD MARKET ($) PRICE COMPARISON 130 000 120 000 110 000 CAGR 4% 100 000 90 000 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 - WK 1 WK 2 WK 3 WK 4 WK 5 WK 6 2020 2025 2019 2020 2021 2021 SEASON WEE
Slide 29: Fishmeal and Fish Oil - Global Outlook 2021
FISHMEAL AND FISH OIL - GLOBAL OUTLOOK 2021 SUPPLY DEMAND GLOBAL FISHMEAL PRODUCTION ('000MT) ▪ Demand recovery to continue in line with feed/food 6 000 recovery 5 000 4 000 ▪ Fishmeal consumption in China for 2021 revised 3 000 upwards by 5-8% as aquaculture farming recovers 2 000 ▪ Sow herds in Ch
Slide 30: FMO – H2 Outlook
FMO – H2 OUTLOOK TAILWINDS HEADWINDS • SA and US biomass healthy • SA port logistical challenges • Addition of 12th vessel together with run- • Stronger Rand impacts SA exports and boat to operate full season in Daybrook Daybrook translation • Continued global aquaculture recovery as • SA winter imp
Slide 31: Blue Continent Products
Blue Continent Products ▪ Horse mackerel ▪ Hake ▪ Lobster & squid POSITIVELY IMPACTING LIVES 31
Slide 32: Horse Mackerel
HORSE MACKEREL KEY PERFORMANCE INDICATORS PERFORMANCE MARCH MARCH 2020 2021 Revenue % VAR 12% 11% ▪ Improved catch rates in South Africa offset by reduced landings and sea days due to Desert Landings 3% 9% Diamond maintenance Tons ▪ Namibia catch rates down but compensated for Sea days - Namibia by
Slide 33: Hake
HAKE KEY PERFORMANCE INDICATORS PERFORMANCE MARCH MARCH 2020 2021 Revenue % VAR 5% 5% ▪ Industry wide lower catch rates together with 2 statutory dry-docks resulted in lower landings Sea Days days 2% 9% ▪ Strong local demand for small hake resulted in improved pricing Landings ▪ European prices unde
Slide 34: Lobster & Squid
LOBSTER & SQUID KEY PERFORMANCE INDICATORS PERFORMANCE MARCH MARCH 2020 2021 Lobster landings Tons 34% 7% ▪ Higher live lobster prices buoyed by improved demand from China Squid landings 43% 82% ▪ Squid landings improved due to good catch rates Tons and a successful catching partnership arrangement
Slide 35: BCP – H2 Outlook
BCP– H2 OUTLOOK TAILWINDS HEADWINDS HORSE MACKEREL HORSE MACKEREL • Healthy SA biomass • Risk of COVID-19 infections • Namibian quota at reasonable prices • Namibian catch mix • Transhipments mitigate COVID-19 logistic delays, and improved working capital • Strong demand in neighbouring countries –
Slide 36: Commercial Cold Storage
Commercial Cold Storage POSITIVELY IMPACTING LIVES 36
Slide 37: CCS
CCS KEY PERFORMANCE INDICATORS PERFORMANCE MARCH MARCH 2020 2021 Revenue % VAR 3% 9% ▪ Occupancy levels impacted by: - reduced imports from global container shortage Revenue per pallet ZAR/pallet 1% 4% and port logistic challenges - Lucky Star frozen fish procurement Occupancy levels % 9% 9% ▪ Reven
Slide 38: CCS – H2 Outlook
CCS – H2 OUTLOOK TAILWINDS HEADWINDS • Longer dwell time of export product in • Reduction in imports due to import tariffs, stores as a result of container shortages exchange rate and resource availability • Improved frozen fish procurement • Market uncertainty affecting customer production planning
Slide 39: Strategic Overview & Outlook
INTRODUCTION PERFORMANCE OVERVIEW FINANCIALS OPERATIONAL REVIEW STRATEGIC OVERVIEW & OUTLOOK POSITIVELY IMPACTING LIVES 39
Slide 40: Key Focus Areas for H2
KEY FOCUS AREAS FOR H2 Continued focus Strong fleet Continue to monitor On-going vigilance on driving production deployment and plant operational impact of and continued efficiencies in land availability in FMO freight delays and port adherence of based facilities in segment when fishing logistics o
Slide 41: Strategy Remains Intact
STRATEGY REMAINS INTACT OUR STRATEGIC FOCUS OVER THE LONGER TERM REMAINS: Growth De-gearing Optimising Embarking in our canned fish our balance sheet and retaining our on long term human and FMO businesses while maintaining an core quota capital and through increased acquisitive outlook businesses i
Slide 42: FRAP 2021
FRAP 2021 ▪ DEFF remains committed to the year end FRAP execution deadline - Minister to PFC May 2021 – “clean, transparent, accountable, transformative and legally defensible” process - Various service providers appointed to bolster capacity ▪ Economic impact assessments for key sectors have been p
Slide 43: ESG Considerations
ESG CONSIDERATIONS Carbon neutrality initiatives ▪ Formal commitment to carbon neutrality, published KPI and management targets in STIs ▪ Key dates: - 2030 50% reduction - 2050 net zero emissions ▪ Mega renewable energy project SA, vessel Freon conversions, Daybrook and CCS solar projects ▪ West Coa
Slide 44: The Oceana Empowerment Trust
THE OCEANA EMPOWERMENT TRUST 2021 EMPOWERMENT TRUST ▪ Approved by shareholders in February 2021 ▪ 6% share issued at R530m (OET1 at inception was R220m) ▪ Allocations to be completed prior to September 2021 ▪ Equal allocations to all qualifying employees, regardless of race, gender, grade or length
Slide 45: Questions
QUESTIONS POSITIVELY IMPACTING LIVES 45