Chemicals, explosives and fertiliser group Omnia said on Tuesday that its chemicals division remained under pressure as the activity levels in the South African manufacturing sector continued to be muted, but that it was seeing buoyant growth from its mining and agriculture divisions.
MD Rod Humphris said the group saw significant potential for its mining division, especially in the rest of Africa, with volume growth expected across the division’s entire product range.
“At the moment, about 25% of our revenue is generated in the region, and with a promising coal sector going forward, as well as the development of uranium mines in Namibia, and the growing copper interest in the Democratic Republic of Congo. We are happy to grow our business in the region.
“Volume growth in mining is still good, with a number of new mines coming into play in the next few years. Although the coal price has gone down, we are not seeing it as a major concern,” he told Mining Weekly Online, at the group’s results presentation in Johannesburg.
Omnia increased its profit for the year ended March by 39% to a record R629-million. Headline earnings a share rose 25% to 959c, while revenue was up 16.8% to R10.9-billion.
Humprhis said that the completion of the company’s new R1.4-billion nitric acid complex provided a solid base for Omnia’s next growth stage.
“There are four key drivers for the business going forward, including the good demand for mining and agricultural commodities and a growing demand for our products from African economies,” he noted.
The company resumed dividend payments ahead of expectations, declaring a final dividend of 180c a share, which, together with the interim dividend of 100c a share, brought the total dividend for the financial year to 280c a share.
At the time of the equity raising for the new nitric acid plant, the board indicated that the group would only resume dividends in 2013.
The company reported that its agriculture division showed good volume growth. Fertiliser prices increased steadily over the course of the year, reflecting the same trends seen in international markets, where demand outstripped supply.
But the weak activity in the manufacturing sector held back its chemicals division. “Despite low interest rates, economic activity levels in the South African manufacturing sector remained muted owing, in part, to rand strength against the US dollar. This hindered our chemicals division, as its primary customer base is drawn from the South African manufacturing sector,” the company said in a statement.
However, the chemicals division was expected to improve its performance in the year ahead by a renewed focus on growing revenue through volume growth in South Africa, supported by efficiency improvements and tight cost management.