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JOHANNESBURG (miningweekly.com) – JSE-listed Omnia has posted a 40% increase in headline earnings a share to R13.32 for the year ended March 31, on the back of what MD Rod Humphris described as an “exceptional” macro environment for its mining services division.
The 60-year old diversified provider of specialised chemical products and services for the mining, agriculture and chemicals sectors achieved a 23.7% increase in group revenue, from R10.95-billion in 2012 to R13.54-billion for the current reporting period.
Omnia’s operating profit breached the R1-billion mark for the first time, increasing by 39.4% to close the year on a record high of R1.24-billion, which was largely attributed to the group’s new nitric acid complex, which was currently operating at 60% capacity and continuing to ramp up to full production.
“The macro environment for this year was exceptionally positive for our mining division, good for our agriculture division, and difficult for our chemicals division,” Humphris said at the company’s results presentation on Tuesday.
Revenue for the mining division increased by a hefty 43.5% to R4.38-million on the back of strong volume growth of 24% and an average sales price increase of 20%.
The division’s operating profit increased by 54% to R735-million for the year.
These results were driven by strong demand for mining commodities from Africa and a softening and stabilisation in global metal and minerals prices, and were achieved despite a reduction in volumes supplied to the South African underground market.
The weakened dollar/rand exchange rate also boded well for the group and improved profit performance.
The group’s agriculture division, meanwhile, posted a “good” yearly performance, amid sustained high global crop prices, recording a 21% year-on-year improvement in revenue to R5.4-billion and a 37% increase in operating profit to R443-million.
While the new nitric acid complex positively affected the division’s gross margins, an unfavourable ammonia-to-urea volume ratio negatively impacted on the division, constraining the agriculture division’s operating margin to a lower-than-expected 8.2%.
The group’s chemicals division, which Humphris described as the “weak link” of the group, saw a 35% contraction in operating profit to R56-million and an operating margin of 1.5% – down 1.6% on the prior year and below the yearly target of between 4.5% and 5.5%.
Despite a 10% improvement in revenue to R3.8-billion on the back of higher unit selling prices, the chemicals business suffered as a result of a depressed local manufacturing industry, to which it supplied specialty, functional and effect chemicals and polymers.
PROSPECTS
Omnia group finance director Noel Fitz-Gibbon said on Tuesday that the expected macro environment for the coming year appeared “promising” for the company.
He expected further growth volumes across the mining division’s entire product range, as companies look to expand into Africa and the company records full-year benefit from several recently acquired contracts in the sector.
Commenting on the outlook for the agriculture division, Fitz-Gibbon said the company expected mixed results in the coming year.
“While we expect favourable sales volume conditions for agriculture, we also anticipate less favourable margin conditions, as the ammonia-to-urea ratio is not expected to revert back to its historical normal range in the next financial year,” he said.
In addition, he expected the weaker rand and strategic cost reduction initiatives to improve the performance of the ailing chemicals division.
The board declared a final gross cash dividend of R2.70 a share for the year.