JSE-listed Omnia’s earnings a share for the six months ended September 30, rose 16% year-on-year to 637c a share, with Omnia MD Rod Humphris noting at the company’s interim results presentation that the macro environment for the company’s mining division was positive, while the macro environment was mixed for its agriculture and chemicals divisions.
For the six months under review, the company’s revenue increased 25.7% year-on-year to R7.5-billion, while profit was up 16.8% to R424-million, which Humphris attributed to continued good demand for mining commodities, strong volume growth in mining explosives and mining chemicals and a weaker rand.
Omnia’s mining division grew its revenue by 37% year-on-year to R2.8-billion, with the operating margin at a constant 16.5%. The division’s operating profit increased 35% to R453-million.
Meanwhile, Humphris noted that global fertiliser prices were weaker, while the company was also seeing the negative impacts of an unfavourable ammonia:urea ratio and muted manufacturing growth in South Africa.
The company’s agriculture division recorded revenue of R2.7-billion, an increase of 24% compared with revenues earned in the prior comparative period.
While there was good growth in agriculture and fertiliser sales, the agriculture division’s operating profit was down 35%, to R122-million, with a reduced operating margin of 4.5%, compared with the 8.6% recorded at the end of September 2012.
“Global crop prices are at good levels and global fertiliser prices are under pressure, but the rand weakness offsets global price reductions. Further, the urea:ammonia ratio [has] improved but remains unfavourable,” he stated.
The gross operating margin was impacted by the under recovery of granulation plant overheads, the unfavourable ammonia:urea ratio and the effect of the new lower-margin wholesale business, which began operating at the beginning of the year.
Meanwhile, the chemicals business’ revenue was up 15% year-on-year to R2-billion, as a result of the continued low activity levels in the local manufacturing sector, Humphris said.
The company was well positioned for growth in Africa, he noted, with a good overall performance expected in 2014.
Humphris said the company’s mining division expected a small increase over first-half volumes in the second half of the financial year, aided by the continued benefit of the weaker rand.
The agriculture division should see favourable planting conditions in most of the regions as agricultural produce prices were expected to remain at high levels.
He added that margins would continue to be negatively affected by the unfavourable ammonia:urea ratio.
Further, the chemicals division was expected to continue the improved first-half performance in the second half, but was not likely to achieve the operating margin target of 4.5% to 5.5%.