Oceana Group (OCE) H2 2024 earnings summary

Executive summary

• Delivered record operating profit of R1.63bn, up 9.5% year-over-year, driven by strong US Daybrook and Lucky Star Foods performance, margin expansion, and a Hake turnaround, despite weaker African fishmeal and horse mackerel results.

• Revenue reached R10.1bn, up 0.7%, with higher fish oil prices and improved hake and squid volumes offsetting declines in fishmeal and horse mackerel.

• Major capital expenditure of R645m focused on plant upgrades, vessel repairs, and new product investments to drive future growth and efficiency.

• Benefited from a diversified product range, strong brands, and a healthy balance sheet, positioning for long-term growth.

• Disposed of CCS Logistics, with all conditions met and derecognition on 4 April 2023.

Financial highlights

• Revenue: R10.1bn, up 0.7% year-over-year; operating profit: R1.63bn, up 9.5%; HEPS: 917.6c, up 13.5%.

• Gross profit margin rose by 320bps to 31.8%, supported by higher margin fish oil sales and Lucky Star Foods efficiencies.

• Profit after tax increased by 12.5% to R1.11bn, aided by a lower effective tax rate and improved US operations.

• Total dividends increased by 13.8% to 495c per share; dividend yield above 7%.

• Net debt to EBITDA increased to 1.3x (2023: 1.2x), reflecting higher capital expenditure.

Outlook and guidance

• Focus on expanding Lucky Star Foods into adjacent categories, scaling canned meat and chicken, and driving brand growth.

• Continued investment in operational efficiency and vessel upgrades to improve Wild Caught and fishmeal/oil performance.

• Capital expenditure expected to normalise after a year of significant investment.

• Positive outlook for pilchard and anchovy resources, with investments aimed at long-term sustainability.

• Global fishmeal and fish oil prices expected to face downward pressure due to normalised supply and weaker China demand.