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Send  Share  RSS  Twitter  14 Apr 2012

FISHING: I&J Catches The Profit Wave

 



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IRVIN & JOHNSON (I&J), the Cape-based hake fishing and frozen foods specialist owned by brands conglomerate AVI, has pulled off a remarkable comeback performance in the interim period ending December 2011.

I&J pushed up turnover 12% to R749 million, but operating profits soared to over R100 million from just R3 million in the corresponding period in 2010. AVI said I&J’s results were underpinned by weaker rand (which saw significant currency gains on higher export sales volumes) and improving operational performance (which is an understatement considering the trading margin fattened from a sliver of 0.5% to a wholesome 13.4%).

AVI reported a continued good performance of the hake resource with higher sales volumes stemming from a TAC (total allowable catch) increase of almost 10%.

Besides the obvious initiatives in cost management, AVI also reported an improvement in domestic retail and (some) export prices. A product mix change also helped with I&J serving less retail with more focus on food service and whole fish offerings.

Looking ahead to the second half trading, AVI said I&J would continue to see higher hake volumes from the quota increase.

While export prices would probably be constrained, I&J was likely to see domestic retail prices improving. With an incremental development of export market opportunities I&J would also look to strengthen its local market position with product differentiation and new product development.

What is interesting is AVI’s admission that there would be an evaluation of major factory improvement projects at I&J with a three year payback opportunity.

I&J’s performance should be viewed against the full year performance from the Cape’s other large hake player, Sea Harvest (which is controlled by empowerment group Brimstone).

Brimstone reported that Sea Harvest – in the year to end December – managed to churn gross profits of R151 million (up 21%) and generate impressive free cash flow of R133 million.

Sales for Sea Harvest came in at R966 million – 15% higher than in 2010.

Indeed, it would seem the tide has turned for the long-suffering hake sector…


 
 
 
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