FISHING: Cash Flush Oceana
Recent Western Cape Business News
FRANCOIS Kuttel, the former boss of Irvin & Johnson, appears to have chosen a good time to jump ship to rival fishing group Oceana.
Indeed, Kuttel’s first few months at the helm of Oceana – he was appointed CEO in July last year – could not have been better.
Oceana recently reported that revenue for the year to end September 2009 was up 10% R3.3 billion while operating profit shot up 29% to R411 million.
The star turn for Oceana was the inshore fishing division, which turned an encouraging profit of R948 million (previous year: R700 million) from turnover of R2.1 billion.
Trading margins in the inshore division – no doubt to Kuttel’s delight – improved from 37% to over 45%.
The 2009 Total Allowable Catch (TAC) for pilchard was 90 000 tons (2008: 90 776 tons). Kuttel reports that the size and quality of fish landed was good, resulting in improved canning yields.
He says canned fish production at the St Helena Bay cannery was better than the previous year.
The Namibian pilchard TAC was pegged at 15 000 tons. But Kuttel says production at the Etosha Fishing cannery was lower due to a re-alignment of quota-holders who provide fish to the company.
Kuttel says sales of canned pilchards locally – undertaken mainly under the Lucky Star brand - increased in volume terms. But he notes insufficient product is available to fully meet demand, which means additional supplies were imported to help meet market demand.
Kuttel says anchovy catches were not good, and that by the end of the season Oceana had landed less than half the quota available.
Fish meal production volumes were also lower but Kuttel says higher selling prices on the local and export markets saw improved profitability.
Oceana landed its full quota of west coast lobster (348 tons) thanks mainly to improved catch rates at the end of the season.
Kuttel points out that export prices of lobster were lower in foreign currency terms, which – coupled with the stronger rand - resulted in lower turnover and lower profits.
As regards the midwater and deep sea fishing activities, Kuttel says catches for SA and Namibian horse mackerel were “very good with excellent catch rates per trip and an improved mix of larger fish”.
Namibian volumes were significantly up on the previous year after a third midwater trawler was put to work in August.
Unfortunately for this division the higher turnover from Oceana’s own vessels was offset by a large decline in the trading of fish purchased from foreign fleets operating in Mauritania and the Pacific. This restricted the turnover gain to just 8%.
Kuttel, however, reports that operating profit was “significantly better” due to the improved fishing performance, higher prices and improved margins.
Looking ahead Kuttel believes Oceana is well placed to take advantage of an improvement in global economic conditions.
He stresses fishing conditions in the southern African region remain reasonably stable and the group has opportunities for further organic growth.
CBN cannot help but notice that Oceana’s cash pile is still sitting around R150 million, and wonders whether Kuttel will follow through on his predecessor Andrew Marshall’s suggestion that the company could be ready to make selected acquisitions.
Tough trading conditions are probably putting the squeeze on fishing enterprises that perhaps don’t have the diversity of Oceana. Any distressed companies will probably be glad to settle under Oceana’s solid bow.
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