Premier looks out for acquisitions

Premier Fishing & Brands

— which gets most of its profits from lobster and squid catches — has its hooks baited for new acquisitions. Speaking at the release of its year to end-August financial results on Tuesday, Premier CEO Samir Saban said local and international deals that fit the group’s growth strategy are being pursued and an announcement could be expected soon.

Premier Fishing & Brands — which gets most of its profits from lobster and squid catches

— has its hooks baited for new acquisitions.

Speaking at the release of its year to end-August financial results on Tuesday, Premier CEO Samir Saban said local and international deals that fitted the group’s growth strategy are being pursued.

“Watch out for announcements very shortly.”

Talk around the Cape Town docks is that Premier is set to clinch an offshore acquisition shortly, possibly an operation based in the US.

Premier is still sitting on a cash pile of R350m after the acquisition of 50% of the Talhado squid business in May and further capital expenditure on capacity at its abalone farm in Gansbaai.

OPEN MIND

Asked whether Premier would make acquisitions outside the seafood sector — like rival Sea Harvest, which recently acquired the Ladismith dairy brands business — Saban said that the group would keep an open mind.

“We might look at other avenues. But first we would like to see what transpires in the 2020 long-term fishing rights application process.”

Premier surprised shareholders with a bumper dividend of 25c per share, a 67% hike on last year’s 15c per share.

The group justified the higher payout with a more than doubling in cash generated to R91m. Headline earnings increased 19% to R82m.

Premier’s results were somewhat clouded by technical issues regarding the accounting treatment of profits from the Talhado acquisition.

But if the Talhado acquisition was included from its effective date, Premier’s revenue line was R581m and operating profit R142.5m, representing a fatter operating margin of 24% from 16% in 2017.

The segmental profit report showed Premier’s squid division chipping in R58m, making a larger contribution than lobster (R54m), which has traditionally been the group’s staple species.

Premier noted “excellent catch rates” in squid as well as firm pricing.

The lobster division — mainly involved in the south coast lobster segment — landed 100% of its quota with a good size mix realising higher average prices.

Premier said its abalone farm increased stock holding by 19 tons, with demand still exceeding supply. Average prices were 7% higher than 2017.

Saban said the planned expansion of the abalone farm already increased its capacity from 120 tons to 160 tons.

“We expect to double the farm’s abalone spat production because of the expanded hatchery on the abalone farm.”

The pelagic division fared poorly, with markedly lower profits of R16.4m (R23.6m) on the back of an industry-wide weak pilchard catch. Only 25% of the pilchard quota has landed, but Premier did manage to achieve better prices.

Independent analyst Anthony Clark said further acquisitions would result in Premier landing good earnings in the financial year ahead.

He reckoned the full inclusion of recently acquired Talhado could see the Premier dividend up another 50% to 35c a share in the 2019 financial year.

THE LOBSTER DIVISION LANDED 100% OF ITS QUOTA WITH A GOOD SIZE MIX REALISING HIGHER AVERAGE PRICES