Oceana Results - Year ended September 2024

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Our focus to this now, Oceania has announced its financial results for the year ended September, reporting a 9.5% increase in operating profit to 1.63 billion rand, headline earnings per share rose by 13.5%

while the board declared a full-year dividend of $495, reflecting a 13.8% increase. Neville Brink, CEO at Oceania Group, joins us on the line to take us through the company's latest set of numbers. Neville, a very good evening and welcome to Power Business.

Fantastic. Now, Neville, you reported an improved overall performance compared to last year. But when we dig a little deeper, it's clear that some divisions outperformed others. Could you walk us through how the different segments performed during the year under review? Yes, certainly would love to. And I want to start with Lucky Star. And the reason I want to start it, because Lucky Star is a homegrown band. It's been around for 70 years. And in fact, this year got voted the number one iconic brand in the country.

You know, outperforming brands, international brands like Coca-Cola and KFC and McDonald's. So it's just a wonderful accolade that our brand resonates so strongly with the consumers, South African consumers out there. So that you saw had a great performance. Boiling was fairly flat, but understandable given the constraints that consumers are facing, but operating profit and up very healthily, 25%. And in particular, we've seen an increase in margin.

And how we try to do that is really manage our costs. So we haven't passed any price increase through to the consumers. We try to manage that price because we know what strain our consumers are facing and how tough it is out there to feed your family. So a few stories, a full level high quality protein, and it's done extremely well with here. So that provision did very well. And then the second operation that

performed phenomenally well was our US business. And I'm proud to say South African companies many, many times don't succeed overseas, but certainly for us, Oceona, we've succeeded with an offshore investment and it's paid dividends this year. So it operates out of New Orleans in Louisiana that catches the industrial fish that is converted into fish meat and oil. And we sell to mainly the pet food industry in the US, but also the oil goes to the Scandinavian salmon farms.

Both of those products have done extremely well, particularly that while we've seen an increase in oil price, because of the lack of fish out of Peru, and we've seen a massive turnaround in that business, so very, very healthy performance from our US operation. And then lastly, in South Africa, I hate business, not as well as I would have hoped, but a strong turnaround for year last year when we settled. So those few businesses really drove the performance

in China today. As you mentioned, you've achieved commendable profit levels. Can you share where and how you've been able to drive efficiencies within the business? First of all, and again, a testament to what we believe in this country, we've spent over 650 million brand in Capex this year over the last 12 months, and that Capex has gone in

to firstly, our canneries, the canneries that produce lucky star cultures. And it's all about increasing throughput, yield, and quality. So a lot of new innovation is going into those canneries. Secondly, both of those canneries have fishwheel and oil plants that are linked to them. And in particular, the one on the Berge River in Larklack, we've completely upgraded their factory. We spent over 200 million putting new machinery, new technology, new boilers, which upgraded the

quality and the output of those factories, which is translated into margin. And then lastly, in our fleet, we have a fleet that fishes horse-macole, hake, and squid in our waters. And in all three of those, we've invested heavily on improving the output of those factories, upgrading their factories, upgrading their refrigeration systems, and making them more efficient and less likely to break down. Because a vessel caught alongside doesn't make money.

So that's what only makes money when it's out of sea. So we've invested heavily into the South African economy. Yeah, and I want to touch on Lucky Star, as you mentioned earlier, its performance outperforming the likes of Coca-Cola here at home. But take us through the strategies that have been critical to sustaining this strong demand, especially in a strained consumer environment.

The key for lucky soft horses is pricing. So that you can consume as love horses. It's been around for a long time. But the constraints is pricing. We've got to manage the pricing. So we're very conscious about price barriers. And lucky start, the moment sells on shelf for a can of horses, anything from 22 round to 25 round. And we try and manage that. Obviously, a large portion of that input

comes from imported frozen products. We buy all over the world. We can't catch enough horses in our own waters to supply the demand for lucky stock. So we've got to be very careful about where we buy it and how much we pay it. So managing price is a key component of keeping it affordable. There's no doubt they love the product. But consumers are looking for a product which they can stretch. So lucky stock, a can of lucky stock, and see the family of 46 where they each get a piece of pussy.

and they take the source and extend it onto some sort of starch. And it's worked, and it's worked for a long time, but we are very conscious about managing that process, very conscious about not putting too much inflation into the product and overburdening the consumer. All right. And then looking ahead, Neville, what are the key focus areas in for 2025 and how do you plan to maintain resilience in an increasingly volatile global market?

So they start off with Lucky Star. So they keep asking Lucky Star because that brand is so synonymous with South African consumers and we know they love it so much. We have started expanding outside of pure canned fish. So the division now is called Lucky Star Foods. And we are expanding into adjacent products like canned chicken, canned chicken, livers, corn meat. And particularly, there are some elements of non

protein which we are extending. And we've got to be very conscious not to damage the brand and whatever we extend you must resonate to the consumers that we currently supply. So that's on the lucky star side. And on the industrial side, there's huge opportunities. The industry only catches about 70% of the resource we allocated. And we think there's an opportunity to expand it. That's why we invested heavily in the factories so that when the fishing is available, we can turn those vessels around quickly

and test more of the 30% which we leave annually in the sea. So there's massive opportunities in both SI and US to increase our volume that we put through the factories. All right, lots to look forward to, but we'll leave it there and Neville, thank you so much for your time this evening. My pleasure. Thank you very much.

Fantastic, that was a Neville Brink CEO at Oceania Group, taking us through their financial results for the year ended September, that group reporting strong overall performance.