SEA Harvest starts its 2024 financial year, the 60th since it was established, with additional fishing vessels acquired last year, including the freezer trawler Harvest Cap Nord, a sister vessel to the Harvest Atlantic Peace and Harvest Mzansi, as well as strategic expansions in its fresh fish fleet.
This is according to Felix Ratheb, chief executive of the fishing and dairy foods group – which sells product in more than 30 countries on five continents – in its integrated annual report released on Friday.
Ratheb said that in 2023, these investments in growing capacity had been pivotal in reducing the impact of fluctuating catch rates.
“Even facing the worst catch rates in recent memory, our fishing business saw double-digit earnings growth, underscoring the resilience and defensive nature of our foundational core,” he said.
“In both our South African fishing operations and Australian ventures, debt reduction will be a primary focus, driven by specific deleveraging initiatives aimed at fortifying our financial position.
“Within Ladismith [the group’s dairy food operation in the Western Cape], we anticipate the completion of several transformative projects initiated in 2023, including the installation of a new roller dryer powder plant and the commissioning of [a] solar PV plant.
“These endeavours are poised to yield tangible cost benefits, driving efficiency gains and enhancing our overall operational resilience.”
Ratheb said another milestone last year was the conclusion of the FRAP [Fishing Rights Application Process] appeals process by the Fisheries Minister, which would also provide “much-needed certainty for our business operations, enabling us to plan and invest to achieve a commendable financial outcome”.
He said the earnings growth of the past year had been due to a focus on cost management, market pricing and proactive capacity expansion efforts.
On January 22 this year, the group announced plans to acquire the Terrasan Group, which catches, processes and sells pelagic fish and abalone.
Ratheb said this deal would benefit Terrasan employees by securing jobs and generating value for the beneficiaries of the Saldanha Foods Employee Trust, as well as for the communities of Saldanha, St Helena Bay, Gansbaai, Buffeljags, Kleinzee and Hermanus.
The group said that In the past year there had been a 6% reduction in the availability of its key fishing resource, hake, and to mitigate this prices were raised, and revenue in the South African fishing segment was able to increase by 10%.
The group consumed about 37 million litres of fuel a year, and due to the price increases in 2022 and 2023, fuel cost had increased by R276 million compared to 2021, and now comprised 12% of group cost of sales.
In 2023, in the face of rising oil prices, 32% of its diesel exposure was hedged for the year under review, and a fuel hedge gain of R7.7m was recorded.
Ratheb said the abalone business yielded profits in 2023, but fell short of long-term expectations. A consolidation of the abalone portfolio last year was expected to allow the group to concentrate resources and focus attention on expanding the abalone segment.
In Australia, despite notable successes in the group’s fish and trading businesses, the prawn division faced challenges, primarily attributed to external price dynamics.
Global oversupply compounded by a Covid-19 hangover in China led to lower prawn prices, exacerbated by favourable seasonal rainfall that resulted in record banana prawn catches in the largest prawn fishery in the country.
“This convergence of factors necessitated price adjustments to move inventory effectively, despite the operational soundness and successful integration of our Australian operations,” said Ratheb.
In Australia, Shark Bay prawn catches remained historically low, despite a 33% reduction in effort in 2023. Exmouth prawn catches also decreased.
The general availability of milk in South Africa during 2023 was lower than what was produced in 2022 due to environmental and macroeconomic conditions, but higher margin products were being produced.
Debt reduction would be a focus in both the South African fishing operations and Australian ventures, driven by specific deleveraging initiatives.
The several transformative projects initiated in 2023 in Ladismith would be completed, including the roller dryer powder plant and solar PV plant.
“These endeavours are poised to yield tangible cost benefits, driving efficiency gains and enhancing our overall operational resilience,” said Ratheb.
BUSINESS REPORT