Oceana ‘can’ do it

IT looks like a busy 2015 for Oceana, Cape Town’s largest and most diversified fishing group, with CEO Francois Kuttel noting the company’s important canned fish and fishmeal business had been restructured for growth.

The focus on canned fish and fishmeal comes over and above Oceana continuing to explore further opportunities for acquisitive growth both in South Africa and globally. Oceana’s canned fish business centres on the Lucky Star pilchard brand, one of the best selling protein brands amongst local consumers. This, according to Kuttel, will allow management to effectively explore opportunities for growth both domestically and in the rest of Africa – but also to focus on extracting efficiencies.

Oceana recently reported that in the year to end September its revenue had improved 7% to R5bn. Kuttel said this improvement was led mainly by an increase of 17% in the canned fish and fishmeal division which offset lower horse mackerel catch rates.

Most importantly Oceana’s inventory levels decreased significantly in line with with the company’s canned fish procurement strategy. This meant the company was cash generative to the extent of R487m compared to a decrease in cash of R420m in 2013.

Kuttel said canned fish volumes grew from a strong base of 8,6 million cartons in 2013 to 8,8 million cartons in the 2014 financial year. He said domestic volume growth of 3,3% has been satisfactory given prevailing consumer pressures.

Kuttel said revenue growth for canned fish has been achieved through price adjustments prompted by the impact of the weaker rand exchange rate on the landed cost of imported product.

He noted the 2014 South African Total Allowable Catch (TAC) for pilchard remained the same as 2013 at 90,000 tons.

Kuttel said pilchard landings at the St Helena Bay cannery had been good for the period and additional pilchard quota was contracted to increase production. The Namibian pilchard TAC for 2014 is 30 000 tons (2013: 25,000 tons).

Oceana’s fish meal operations also look to be on a growth wave. Kuttel said current season landings of anchovy and redeye herring of 81 000 tons (2013: 36,700 tons) to the company’s fishmeal plants were significantly higher than in the previous season. He said this resulted in improved production efficiencies and lower costs per ton of manufactured product.

Kuttel said fish meal selling prices were higher due to firm international market prices and the weaker rand exchange rate returning the business to profitability after having made a substantial loss in the prior year.

One issue that Oceana will need to sort out during 2015 is its horse mackerel business, which – until recently – had proved a reliable line of profits.

In South Africa the Precautionary Maximum Catch Limit for targeted catch of horse mackerel increased by 10% to 38 115 tons (2013: 34,650 tons.)

But catch rates in South Africa were significantly reduced due to unexpected scarcity of horse mackerel in traditional fishing grounds. Kuttel said this had a material impact on revenue and cost recovery, and that profit from horse mackerel decreased as a direct result of lower tonnage caught for the period.

He said that in Namibia Oceana continued to seek appropriately priced horse mackerel quota to supplement fishing of owned quota. “We will also continue to assess the viability of opportunities in Angola and have already commenced fishing, having obtained a mid-water trawl license in October 2014.”

By Jenni McCann