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I&J’s profitable share sacrifice

HAKE giant I&J – which is controlled by consumer brands conglomerate AVI – has shed market share, but gained profits.

In the financial year to end June, AVI reported that I&J’s market share of the local hake market had decreased from 52,7% to 47,1% due to targeted value realisation in a volatile market.

I&J’s major competitor in the hake sector is Sea Harvest.

Despite the market share loss I&J managed to grow revenue almost 12% to R2.6 billion on the back of higher hake volumes and a weaker rand.

Profits were up 44% to R342 million with the operating margin fattening to 13.1% (from 10.2% previously).

Importantly I&J’s catch rate – measured by hake tons per sea day – topped 10 tons, which is the best rate achieved in about seven years.

AVI attributed the improved performance to higher wet vessel catch rates and increased freezer vessel availability.

AVI continued to invest in I&J’s capacity in the past financial year. Around R91 million was spent on vessel dry docks and upgrades, and another R23 million was spent on processing plant replacements and upgrades. In the financial year ahead AVI intends spending another R75 million on vessel dry docks and upgrades, and has earmarked R57 million for more processing plant replacements and upgrades.

Looking ahead AVI stressed I&J’s prospects for the twelve months to June 2022 were materially dependent on fishing performance – adding that foreign currency hedges were not as favourable as last year, but would support sound profitability nevertheless.

The group said fishing capacity remained tight with an ever more demanding maintenance regime to support the older vessels in I&J’s fleet.

AVI reiterated that I&J urgently needed certainty on future fishing rights to support investment in replacement vessels. “The hake long-term rights application process, planned to be completed by the end of 2021, should not impact operations in the first semester.”

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