Oceana Group (OCE) H2 2024 earnings summary

Executive summary

• Delivered solid results amid geopolitical uncertainty, rising input costs, volatile weather, and local infrastructure challenges.

• Achieved record operating profit of R1.6bn, up 9.5% year-over-year, driven by strong Daybrook (USA) performance and margin expansion at Lucky Star Foods.

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

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

• Consistent growth over the past four years, with a focus on strategic pillars and operational efficiency.

Financial highlights

• Revenue reached ZAR 10.1 billion, crossing the 10 billion mark for the first time, driven by strong fish oil sales and improved hake and squid volumes.

• Operating profit increased by 9.5% to ZAR 1.6 billion; headline earnings per share up 13.5% to ZAR 9.176.

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

• Free cash conversion ratio declined to 34% (from 82%) due to higher capex and working capital.

• Total dividends increased by 13.8% to ZAR 4.95 per share; dividend yield above 7%.

Outlook and guidance

• Focus on expanding Lucky Star Foods into adjacent categories and driving brand growth.

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

• Capital expenditure expected to normalize to ZAR 340 million in FY 2025 after a year of elevated 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.