Oceana Group (OCE) H1 2024 earnings summary

Executive summary

• Achieved record first-half performance with operating profit up 57% to R1.0bn and revenue up 12.1% to R5.0bn, driven by Daybrook's exceptional fish oil sales and strong Lucky Star results, despite lower wild-caught seafood volumes.

• Headline earnings per share rose 85% to 578.8c, and interim dividend increased 50% to 195cps, reflecting strong profitability and capital expansion plans.

• Net debt reduced by 17% to R2.5bn, supporting a robust balance sheet and enabling significant capital investment.

• Major investments in cannery, fishmeal, and new canned meat plant upgrades, with Lucky Star awarded Most Iconic Brand in South Africa.

Financial highlights

• Daybrook contributed R848m to operating profit, with fish oil prices reaching $5,000–$5,500/ton and sales volumes up 99% year-over-year.

• Lucky Star sold 4.8m cartons, maintaining volume growth and margin improvement from price increases and cost savings.

• Gross margin increased by 700bps to 34.1%, mainly due to higher fish oil pricing and sales mix.

• Cash generated from operations rose 12.6% to R634m; CapEx up 44.9% to R297m, focused on plant and fleet upgrades.

• Net debt/EBITDA improved to 1.2x from 1.6x; profit after tax up 74.2% to R716m.

Outlook and guidance

• Second-half performance expected to remain strong but moderate, with focus on operational efficiencies, product innovation, and bedding down new acquisitions.

• Lucky Star to drive volume growth via affordability and availability; canned fish price increase implemented in April 2024.

• Daybrook to optimize capacity and efficiency, with strong fish oil pricing expected short to medium term.

• Wild-caught segment outlook depends on improved catch rates and continued fleet investment.

• Capital investment program upgrades expected to deliver efficiency gains in the second half.