FISHING: Premier Kick-Starts Saldanha Factory
Recent Western Cape Business News
PREMIER Fishing, which is controlled by empowerment investment company Sekunjalo, has given its strongest signal yet that it intends competing vigorously in the pelagic (mainly anchovy and pilchards) fishing segment.
Last month Sekunjalo announced that Premier Fishing spent “extensively” on upgrading and maintaining of its fishing fleet and facilities during the interim period.
The capital expenditure was around R13 million, and included fleet maintenance and - more significantly - factory upgrades.
Premier Fishing also cleverly put aside R2.5 million in building fuel stocks, a tactic no doubt to offset anticipated fuel price increases. This could be a critical factor in second half-trading - a period in which Premier traditionally makes its profits. (Year-end is 30 September).
Comments from Sekunjalo’s interim results are also fairly telling around a renewed vigour for Premier: “The group will also focus on the marine and fishing business through acquisitions and leveraging strong margins.”
But the most intriguing development is the disclosure that envisaged factory upgrades will take in the fishmeal plant in Saldanha, which readers may remember was shut-down by Premier about five years ago.
Sekunjalo CEO Khalid Abdulla confirms Premier is in the process of assessing the modernisation of the Saldanha Bay fishmeal plant. He says the plant will strategically position Premier for growth in the medium to long term as well as creating new jobs.
Premier ceased its canning operation at Saldanha when the plant was no longer compliant with SABS standards. At that stage it was suggested (at least according to documents presented to the Competition authorities in relation to a joint venture with Foodcorp) that it would require an investment of R20 million to upgrade the plant to make it compliant.
At that stage (when regulations were reducing the size of allowable catch due to environmental concerns) it seemed Premier was reluctant to make such an investment.
The willingness to invest meaningfully into the fishmeal plant suggests Premier – which for the last few years has relied almost exclusively on its West Coast and South Coast lobster catches for cash flow – is seeing the benefits of building a more diverse fishing business.
With that in mind Premier also increased its external fishing quota by some 15%, which was purchased during the interim period and should contribute further to second half performance.
The interim performance from the non-lobster businesses should also give Sekunjalo some cause for optimism.
Abdullah reports that the squid division benefited from improved pricing as well as markedly better catch costs, while the hake division performed ahead of expectations with better volumes being sold.
The catches in the pelagic division were low. But Abdulla said the season only started in mid-January, and that the actual take-off would only have an effect during the second half of the year.
Plans to modernise the fishmeal plant coincide with moves to boost production at Premier’s aquaculture venture at Gansbaai.
Abdullah says Premier is commencing with an EIA (Environmental Impact Assessment) on newly acquired land, which is adjacent to the company’s existing abalone farm in Gansbaai.
“This initiative will not only increase capacity in the division but also increase our brand presence in the international market…”
As a whole, Premier Fishing performed in line with expectations in the first six months of the financial year even though the strong rand weighed down export revenues.
Premier showed a R1 million operating loss, but should swing back to profits with the bulk of its keep traditionally earned in the second half of the financial year.
Abdulla says Premier’s West Coast Rock Lobster division performed satisfactorily compared to last year even though volumes decreased due to a slow start in sales and smaller catch sizes.
“We are confident that West Coast lobster sales will pick up in the second half of the year. The markets in the Far East where most of the products are sold are quite stable.”
He reassures that as most of the sales occur in China, the events in Japan will not impact Premier’s sales in the region.
The South Coast Rock Lobster division had a late start to the season due to longer than anticipated off-season maintenance. Abdulla says sales were also delayed as a result of shipping logistics, which held up deliveries to customers.
“This has improved subsequently and management is confident that this division will catch up during the second half of the year to make up for the shortfall in revenue and profits.”
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