Oceana Group Limited · JSE:OCE
Oceana — FY2015 Earnings Presentation
62 slides from Oceana's earnings presentation, 2015
Slide 1: 2015 Annual Results Presentation
2015 ANNUAL RESULTS PRESENTATION Francois Kuttel & Imraan Soomra
Slide 2: Agenda
AGENDA Financial Group Overview Review Operational Review & Guidance Outlook
Slide 3: Group Overview
GROUP OVERVIEW • South Africa’s most empowered listed company – 2nd year running • Updated core purpose – be a proudly African company, efficiently converting global fishing rights into shared value.
Slide 4: B-BBEE Audit Results
B-BBEE AUDIT RESULTS 99 98.4 98 97.8 97 96 SCORECARD % 95.2 95 94.0 94 93 92 91 2012 2013 2014 2015 NEW CODES
Slide 5: The Oceana Group
THE OCEANA GROUP Incorporated in 1918 …is the largest Important provider of food security with a significant fishing company in protein footprint in Africa, USA, Europe and the Far East Africa and is listed 6,503 Employees of which 4,033 are directly employed on both the Johannesburg and Level 2 B-B
Slide 6: Group Overview
GROUP OVERVIEW 9 3 8 3 4 steel refrigerated steel refrigerated vessels, wholly owned, seawater vessels in seawater vessels in co-owned or joint canneries fishmeal plants South Africa Namibia ventures 2 1 3 5 2 horse mackerel horse mackerel hake freezer hake wet trawler in trawler in trawlers fish tr
Slide 7: 2015 Review
2015 REVIEW TAILWINDS • Improved volumes Fishmeal and Fish Oil, Hake, Namibian Horse Mackerel • Weaker R/$ on exported products • CCS two new sites and improved throughput, high occupancies maintained • Foodcorp approved Dec ‘14, successfully integrated Feb ‘15 • Daybrook – pay away exchange rate R1
Slide 8: Agenda
AGENDA Financial Group Overview Review Operational Review & Guidance Outlook
Slide 9: Group Volume & Price Analysis
GROUP VOLUME & PRICE ANALYSIS 60% 1 200 000 50% 1 000 000 40% 800 000 30% 600 000 20% 400 000 10% 200 000 0% -10% - 2011 2012 2013 2014 2015 Operating profit Sales volumes SP per ton CP per ton
Slide 10: Income Statement
INCOME STATEMENT Group income statement 2015 2014 R'000 Var R'000 Revenue 6 168 777 22% 5 039 134 Gross profit 2 335 780 18% 1 976 528 GP margin 38% -3% 39% Operating profit before share based payments 1 098 341 22% 901 169 Share-based payments (91 086) (21 604) Operating profit before abnormal item
Slide 11: Income Statement – Daybrook Effect
INCOME STATEMENT – DAYBROOK EFFECT SA Business (excl Daybrook) Group income statement 2015 2014 R'000 Var R'000 Var R'000 Revenue 6 168 777 22% 5 594 450 11% 5 039 134 Gross profit 2 335 780 18% 2 088 513 6% 1 976 528 GP margin 38% -3% 37% -5% 39% Operating profit before share based payments 1 098 3
Slide 12: Revenue Movement – Segment
REVENUE MOVEMENT – SEGMENT 115 111 7 574 323 R’m 6 169 5 039 September 2014 Canned fish and Daybrook Horse mackerel Lobster, squid, Commercial cold September 2015 fishmeal and hake french fries storage Increase
Slide 13: Revenue Geographic and Species
REVENUE GEOGRAPHIC AND SPECIES 12% 9% 12% 2% 6% 7% 8% 10% 9% 12% 2% 2% 6% 5% 1% 14% 19% 43% 52% 9% 75% 21% 64% South Africa and Namibia Other Africa Canned Fish Fishmeal & Fish oil UK & Europe Far East Horse Mackerel Hake America Other Lobster Squid Other 2015 Outer circle 2014 Inner circle
Slide 14: Operating Profit Movement
OPERATING PROFIT MOVEMENT 180 136 2 11 72 R'm 1 007 880 September 2014 Canned fish and Daybrook Horse Mackerel LSF CCS September 2015 fismeal & Hake Increase Decrease
Slide 15: Revenue & Operating Profit Contribution
REVENUE & OPERATING PROFIT CONTRIBUTION R’m Canned fish and fishmeal R’m Horse mackerel & hake 7 000 Lobster, squid, french fries 1 200 000 CCS Logistics Daybrook 6 000 574 1 000 000 459 179 5 000 412 344 107 405 800 000 45 117 4 000 1 315 47 1 203 600 000 3 000 347 211 400 000 2 000 3 409 3 086 200
Slide 16: Currency Analysis
CURRENCY ANALYSIS REVENUE COST 32% 33% 35% 42% 43% 67% 68% 67% 65% 58% 57% 2013 2014 2015 33% 2013 2014 2015 ZAR Other currencies
Slide 17: Financial Position
FINANCIAL POSITION Group Balance Sheet 2015 2014 R'000 R'000 Property, plant and equipment 1 537 293 524 146 Intangible assets 4 469 232 85 821 Deferred taxation 25 583 24 119 Investments and loans SA R394m 470 778 225 553 USA R787m Current assets 2 789 427 1 771 655 Stock days 85 89 Debtors days 39
Slide 18: Cash Flow
CASH FLOW 4 025 4 544 189 427 113 1155 1 136 164 41 1 181 344 659 Opening cash Cashflow cash flow Interest & Dividends Capex Other Cash flow Rights offer Long term Business Interest and Closing cash from from Tax investing prior to debt acquisition abnormal operations operations activities business
Slide 19: Debt and Interest
DEBIT AND INTEREST LONG TERM DEBT 60% US Debt Fixed 100% SA Debt Floating 6% 13% 42% 25% 20% 75% 19% WEIGHTED AVERAGE RATE 6.2% OET 3 year bullet 3 year bullet Floating Fixed 4 year bullet 5 year amortisation US Debt
Slide 20: Revenue and HEPS
REVENUE AND HEPS GROUP REVENUE HEPS (cents) ZAR'm CAGR 14% 6 169 CAGR 15% 588.22 549.23 5 039 487.85 4 701 455.70 4 648 3 657 333.60 22% 7% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
Slide 21: Dividends
DIVIDENDS 2015 var 2014 Headline earnings R000's 611 778 8% 567 238 Dividend required to maintain 1.5 times cover R000's 407 852 8% 378 932 Number of shares in issue (net of treasury shares) 000's 116 588 16% 100 512 Weighted average number of shares 000's 104 005 1% 103 278 Headline earnings per sh
Slide 22: Agenda
AGENDA Financial Group Overview Review Operational Review & Guidance Outlook
Slide 23: Canned Fish & Fishmeal
LAMBERTS BAY FOODS OCEANA LOBSTER ‘CALAMARI FISHING
Slide 24: 2015 - Canned Fish Review
2015 - CANNED FISH REVIEW • Local sales volumes flat in H1 and declined in H2 • Continued consumer pressure and xenophobic attacks negatively impact H2 volumes • Price increase in February of 8% • Overall SA market share remained intact • Positive signs in the rest of Africa – volumes up 6% • Cost o
Slide 25: Monthly Canned Fish Volumes - SA
MONTHLY CANNED FISH VOLUMES - SA 1 200 000 F2014 F2015 1 000 000 800 000 600 000 400 000 200 000 PRICE INCREASE 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 26: Monthly Canned Fish Volumes - SA
MONTHLY CANNED FISH VOLUMES - SA 1 200 000 F2014 F2015 Linear (F2014) Linear (F2015) 1 000 000 800 000 600 000 400 000 200 000 PRICE INCREASE 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 27: Market Share - SA
MARKET SHARE - SA Oct’13 – Sept’14 Oct’14 – Sept’15 Last 3 month vol. share vol. share vol. share Lucky Star in Retail 70,0 % 70.1 % 68,1 % Pilchards in Retail - 2,0 % +0,1 % - 5,4 % HOUSEHOLDS/YEAR (%) CONSUMPTION/HOME/YEAR (KG) 90.0% 88.8% 88.0% 5 4.6 4.6 88.0% 4.3 85.2% 4.0 4.0 86.0% 4 3.5 84.0%
Slide 28: Canned Fish Volumes - Rest of Africa
CANNED FISH VOLUMES - REST OF AFRICA VOLUMES (EXCL. SA) 272 000 237 000 246 000 493 000 526 000 539 000 2013 2014 2015 BNLS ROA
Slide 29: Canned Fish Production
CANNED FISH PRODUCTION • Material increase in cost of imported product. Average converted rate of R12.11 compared to R10.50 in 2014 • Focus has shifted to utilising spare capacity in local plants (SA and Namibia) to augment expensive imports with frozen local production • Poor weather conditions hav
Slide 30: Imports vs Local Production
IMPORTS vs LOCAL PRODUCTION (cartons ‘000) 100% 90% 80% 70% 60% 50% Reduction due to 40% lower landings in 2015 FY 30% 20% 10% 0% 2012 2013 2014 2015 Own fresh Own frozen Procured SA Procured internationally
Slide 31: Fishmeal Review
FISHMEAL REVIEW • Significant improvement in landings over the period • Overall weather conditions more favourable compared to prior year • Added benefit of Foodcorp volumes • International pricing reduced during the period due to Peruvian production back on line during H1 • Pricing – improvement in
Slide 32: Landings
20 000 40 000 60 000 80 000 0 100 000 120 000 140 000 Oct-Dec 17-Jan 20-Jan 23-Jan 26-Jan 29-Jan 01-Feb 04-Feb 07-Feb 10-Feb 13-Feb 16-Feb 19-Feb 22-Feb 25-Feb 28-Feb 03-Mar LANDINGS 06-Mar 09-Mar 12-Mar 15-Mar 18-Mar 21-Mar 24-Mar 27-Mar 30-Mar 02-Apr 05-Apr 08-Apr 11-Apr 14-Apr 17-Apr 20-Apr 10 ye
Slide 33: Historic Fishmeal Prices – 4 year view
US$/t 500 0 1 000 1 500 2 000 2 500 Sep-11 3 000 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 HISTORIC FISHMEAL PRICES – 4 year view May-15 Jul-15 Sep-15 Nov-15
Slide 34: Historic Fishmeal Prices – 10 year view
US$/t 500 0 1000 1500 2000 2500 Oct-05 3000 Feb-06 Jun-06 Oct-06 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 HISTORIC FISHMEAL PRICES – 10 year view Oct-14 Feb-15 Jun-15 Oct-15
Slide 35: Daybrook
DAYBROOK _ #CCS ES fa LAMBERTS BAY Coaistics OCEANA LOBSTER CALAMARI FISHING FOODS
Slide 36: Daybrook
DAYBROOK • Fully integrated into Oceana structures • Management team in place – New MD and CFO have been appointed (names to be announced in due course) • Landings improved by 20% on last season • Overall production output improved on business plan • Stock levels at year end better than expected
Slide 37: Landings Comparison
LANDINGS COMPARISON DAYBROOK CATCH COMPARISON 700 000 600 000 500 000 000 Standard Fish 400 000 300 000 200 000 100 000 0 1 6 11 16 21 26 Weeks 2015 2014 5 Year Av
Slide 38: Production Stats
PRODUCTION STATS 140 000 30.0% 120 000 25.0% 100 000 20.0% Metric Tons 80 000 15.0% 60 000 10.0% 40 000 5.0% 20 000 0 0.0% Jul - Sept 2015 Jul - Sept Bus. Plan Landings Fishmeal Output Fishoil Output Fishmeal Yield % Fishoil Yield % Linear (Fishoil Yield %)
Slide 39: Inventory
INVENTORY 35 000 30 000 6 749 25 000 20 000 Metric tons 6 371 15 000 24 620 10 000 14 723 5 000 0 2014 2015 Meal Oil
Slide 40: Horse Mackerel & Hake
HORSE MACKEREL & HAKE
Slide 41: 2015 Horse Mackerel SA
2015 HORSE MACKEREL SA • Reduced landings in the period — 1st Quarter: Rudder repair and then fished in Namibia on contracted quota — 2nd Quarter: Returned to SA and caught 35 mt/day — 3rd Quarter: Fished in Namibia on expensive contracted quota — 4th Quarter: Returned to SA and caught at 4mt/day an
Slide 42: 2015 Horse Mackerel Namibia
2015 HORSE MACKEREL NAMIBIA • TAC unchanged but own quota reduced • Significant increase in purchase quota costs • Landings have increased over the period — Jewel in Angola for H1 – excess capacity in Namibia — Diamond assisted in H2 when additional quota was purchased • Pricing remained fairly stab
Slide 43: Horse Mackerel Namibia
HORSE MACKEREL NAMIBIA 120 000 90% 80% 100 000 78% 70% 80 000 60% Tons 50% 60 000 45% 40% 40 000 30% 20% 20 000 10% 5% 0% - 0% 2012 2013 2014 2015 Own quota Contracted quota Quota usage fees price increase
Slide 44: Horse Mackerel Pricing
HORSE MACKEREL PRICING HORSE MACKEREL AVERAGE EX HATCH PRICES (US$ PER TON) 1 200 1 100 1 060 1 070 1 000 850 900 860 800 775 730 700 640 620 600 500 400 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 20+ 18+ 16+ 16m
Slide 45: Hake Review
HAKE REVIEW • Solid overall performance – bolstered by Foodcorp volumes and capacity • Vessel utilisation and catch rates on frozen fleet have improved • Revenue negatively impacted by – smaller size mix – ZAR strength against Euro
Slide 46: Hake Catch Stats
HAKE CATCH STATS 11.4 18 000 10.9 12.0 10.1 16 000 10.0 14 000 12 000 8.0 10 000 7 6.0 8 000 6 000 4.0 4 4 4 000 2.0 2 000 0 - 2013 2014 2015 Own quota Joint ventures Contracted quota Average catch rate Vessels
Slide 47: Impact on Hake Sales Prices
12.50 13.00 13.50 14.00 14.50 15.00 15.50 16.00 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 14.32 Apr-14 May-14 Month end closing Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 2014 average Dec-14 EURO / ZAR Jan-15 Feb-15 IMPACT ON HAKE SALES PRICES Mar-15 Apr-15 13.89 May-15 2015 average Jun-15 Jul-15 Aug
Slide 48: Lobster, Squid & Fries
LOBSTER, SQUID & FRIES
Slide 49: 2015 Review
2015 REVIEW • Lobster — Volumes up – 100% of quota landed, production mix improved — Pricing stable in USD, exchange rate benefit • Squid — Volumes doubled — Euro pricing down 20% • Fries — Volumes down due to load shedding and lower quality raw material — Margins negatively impacted by lower produc
Slide 50: CCS Logistics
CCS LOGISTICS
Slide 51: 2015 Review
2015 REVIEW • Consistently high occupancy levels – average 88% for 2015 • 24% increase in number of pallets handled • New sites – Midrand 1 and 2 have been positive contributors • Fruit performance solid • Transport business growing steadily off a low base • Angola site opened – September 2015
Slide 52: Pallet Capacity & Occupancy
PALLET CAPACITY & OCCUPANCY 160000 100% 90% 140000 80% 120000 70% Number of Pallet spaces 100000 60% 80000 50% 40% 60000 30% 40000 20% 20000 10% 0 0% 2011 2012 2013 2014 2015 Years Frozen Ambient Occupancy Linear (Occupancy)
Slide 53: Outlook
OCEANA/GROUP
Slide 54: 2016 Outlook: Canned Fish and Fishmeal
2016 • Canned Fish South Africa – price increases will be kept to a minimum, timing planned to coincide with expected higher food inflation period – increase in promotional activity – local production ramping up – further efficiencies on merchandising, freight and distribution costs • Canned Fish Re
Slide 55: Production Stats
PRODUCTION STATS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2012 2013 2014 2015 2016 Own fresh Own frozen Procured SA Procured internationally
Slide 56: Mercury
MERCURY SS BCS GR rome URSIN ce oe oun
Slide 57: Angola
ANGOLA aauna
Slide 58: 2016 Outlook: Horse Mackerel and Hake
2016 • Horse Mackerel Namibia – Excess and underperforming capacity has been sold, expect margin improvement as a result – volumes owned and contracted 60,000 tons (50/50 split) • Horse Mackerel SA – Frap 2016 – approval to fish West of 20 degrees East – TAC reduction of 8% expected • Hake – FRAP 20
Slide 59: 2016 Outlook: Lobster, Squid, Fries, CCS
2016 • Lobster – 11% TAC increase, FRAP 2016 • Squid – resource looks healthy and similar catches expected • Fries – steady demand expected, potato crops early indicators look positive • CCS – Angola now online – high occupancy levels expected to continue – Brownfield expansion opportunities being c
Slide 60: Agenda
AGENDA Financial Group Overview Review Operational Review & Guidance Outlook
Slide 61: Guidance 2016
GUIDANCE 2016 • Effect of Daybrook and Foodcorp for full 12 months • CAPEX will remain at current levels • Fishmeal pricing positively impacted by El-Nino • Export businesses impacted by ZAR/USD rate movements • Continue to extract efficiencies — Finance shared services — Phase 1 launch 1 December 2
Slide 62: Thank You
OCEANA/GROUP LAMBERTS BAY FOODS OCEANA LOBSTER