Omnia Holdings reported a robust 32% increase in headline earnings per share for the six months to September 30 after its supply chain optimisation programme and integrated manufacturing capabilities supported the chemicals group through tough market conditions globally.
CEO Seelan Gobalsamy said it was an “exceptional financial performance” that had seen strong performances from all their main businesses in the face of ongoing international geopolitical conflict and supply chain challenges, deteriorating utility infrastructure, socio-political instability and disruptions to electricity supply in South Africa.
He said in an online interview their business model enabled Omnia to maintain its competitive position, and be agile and responsive in delivering to their Agriculture, Mining and Manufacturing customers.
Revenue, excluding Zimbabwe, increased by 19% to R11.6 billion. Operating profit increased 47% to R1.1bn.
He said they made progress on ESG objectives with the commissioning of a reverse osmosis plant and 5 megawatt solar energy plant in Sasolburg.
Commissioned in October 2022, the solar energy plant generates 5 megawatts of electricity. Together with the electricity from excess process steam at the nitric acid plants, the site’s energy generation would average 25%-35% of the annual requirement. Another 5 megawatts of solar was expected to be installed in 12 months, he said. In addition, an emission abatement system in Sasolburg resulted in a 31% reduction in carbon emissions.
Successful implementation of the operating model also ensured the security of supply of ammonium nitrate, despite ammonia supply constraints, customer demand was met across all business segments.
Additional key performance drivers included a volume- margin mix improvement, greater sales of specialty and value adding chemicals, in an elevated commodity price environment.
Some R2.1bn was invested in working capital, in stocks and inventory in the face of global supply constraints and rising prices in the agriculture and mining focused businesses.
Group revenue (excluding Zimbabwe) increased 19% to R11.6bn Operating profit (excluding Zimbabwe) rose by 47% to R1.1bn Working capital increased to R5.2bn.
Gobalsamy said sales volumes increased in the second quarter and working capital was expected to unwind for the full year. The balance sheet remained strong with cash of R140m.
He said international expansion in the mining explosives and bio-fertiliser businesses in particular, would continue to be areas of focus, as well as value-adding potential bolt-on acquisitions should the opportunities arise.
The Agriculture segment delivered a 17% increase in revenue to R5.8bn, supported by growth in the AgriBio business and elevated commodity prices. Volumes reduced compared to the prior period, largely due to South African farmers buying inputs later in the season in anticipation of softening commodity prices, inclement weather delaying harvesting, and the deferred contract process in Zambia. Operating profit rose 34% to R658m owing to an optimised margin mix, supported by efficient manufacturing and an agile supply chain.
Manufacturing’s focus on quality products and optimisation enabled the business to market superior offerings at competitive prices. Sustained offtake from the Mining segment, in combination with trade sales, contributed to higher plant utilisation, positively impacting margins and profitability.
A supportive commodity price environment enabled the Mining segment to achieve a 32% increase in revenue to R4.3bn and a 44% rise in operating profit to R359m.
The local team secured multiple contract extensions and gained new business. Several new mining contracts were secured in the SADC and in Namibia a sizeable customer renewed its contract.
The Chemicals segment’s net revenue remained stable at R1.4bn, as momentum was gained in transitioning to a specialty chemicals business. Operating profit more than doubled to R104m - benefiting from product-mix improvements across the business.
BUSINESS REPORT