ABOUT
OMNIA

Industrial [photo] 

Strategy

Our purpose

Protecting life, sustaining livelihoods, creating a better world.

As noted in our advocated purpose, Omnia exists not merely to manufacture and distribute chemicals, but to sustainably secure food and mineral sources in these industries that employ large workforces. While creating jobs across the value chain, internally, we are preparing our employees for the future, training them towards new job profiles and innovation orientated talent. We are creating a better world by innovating in the AgriBio sector, shifting from chemically engineered solutions to organic, bio and biomolecular solutions. We look to leverage technology to conduct our business, and that of our customers, in the most sustainable manner possible.


Our vision

Our vision describes the broad strategic direction we believe Omnia should take in creating a sustainable and growing business that will be relevant in the future, taking into account the key drivers of future change.
Omnia [logo]

An international, diversified, sustainable group of businesses, which are recognised for leading the change from chemicals to green chemicals, biotech and biomolecular solutions, offering network created, innovative technologies that protect life on earth and beyond.

Light bulb [icon]

SUSTAINABILITY DRIVER

Society and regulators are driving the sustainability agenda hard in pursuit of an acceptable level of CO2 emissions and the prevention of a 2°C temperature rise by 2050. This could expose the business and affect the overall demand growth for chemicals, depending on each division’s product portfolio. Further, inflated energy prices make production more expensive.

Climate shocks impact the volatility of the agriculture and mining markets; too little rain affects the one and too much rain affects the other.

A key component of Omnia’s strategy is sustaining livelihoods and creating a better world. We will aim to achieve this by investing in sustainable technologies and initiatives that will improve the efficacy of our products, reduce customer impacts, and enhance efficiencies. All our businesses are geared towards exploring solutions that will reduce environmental impact and enhance stakeholder value.

Technology [icon]

TECHNOLOGY DRIVER

Artificial Intelligence (AI) is increasingly pervasive in all activities that deal with large sets of data – such as production, marketing and sales, and R&D – opening the way to a new level of functional excellence. Technology will lead to process automations and change the way chemical companies think about complexity, scale, and in- and outsourcing administrative activities. Further, GPS and satellite technology will reduce the demand for fertilizer and emulsion, as farmers are applying fertilizers with precision where needed, and miners can only blast along the ore line, both resulting in better yields with less chemical application. Finally, should quantum computing become available on a broader scale, it may rejuvenate part of chemical R&D.

Omnia’s technology driver is to deliver precision solutions to the agriculture and mining markets.

Investors [icon]

INVESTOR SENTIMENT

Investors’ sentiment toward the chemical industry has changed in light of a recent slowdown in the performance, volume trends and return on invested capital (ROIC) of the industry.

Omnia’s investor sentiment driver is to leverage pattern recognition made possible by AI to increase performance transparency around equipment and employees, chemical products (particularly specialties), management teams and individual activities or business lines. This transparency will inform shareholders and educate their views on our operational and strategic performance of companies.

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ECONOMICS

COVID-19 has significantly changed the outlook for Africa, once lauded as the next big economic growth continent. With surging political instability, the chemical industry must confront diverging standards of trade agreements, import protection and other economic restrictions that will affect supply chains. Many indicators suggest diverging standards will likely continue.

Omnia’s economic driver is to enable growth on the continent and diversify our revenue sources globally to manage uncertain macro-economic outcomes.

Omnia [icon]

THE FUTURE OF WORK

Digitisation and globalisation have sparked radical shifts in how we live and work. The coronavirus crisis accelerated these beyond anything we could have imagined. Virtual networks, virtual offices and the management of virtual workforces have come sooner than expected, and are here to stay. Blue collar workforces will shrink with the greater adoption of technology and automation and higher unemployment could potentially lead to social unrest.

Omnia’s future of work driver will promote rapid learning and reskilling initiatives in both the physical and virtual environments.

Our strategy

We will approach the ambitious route towards the Omnia of the Future with sustainability goals at the core of execution in three distinct phases:

  • In the short term (FY2022 to FY2024) we will renew the current businesses through changes to the way we work (processes, synergies, culture) while, in parallel, carefully starting to reset and grow the organisation:
    • Through capital allocation, informed by sustainability measures, into organic and inorganic (both acquisitions and partnerships) growth opportunities
    • By means of a focused capital expansion strategy that will balance the heavy assets in South Africa
    • By stabilising the new operating cost base and operating model
    • Through international product and technology expansion
  • In the medium term (by FY2027) we aim to create a sustainable, customer centric business, with a highly motivated workforce that wins in customer markets and embraces new technology developments as a fast follower, and have a lower environmental impact as set out in our sustainability strategy
  • In the long term (post FY2027) our ambition is to create the Omnia set out in our vision – an international, diversified, sustainable group of businesses (including agriculture and mining) expanded into other primary and technology sectors to leverage our competencies) which are recognised for leading the change from chemicals to green chemicals, biotech and biomolecular solutions, offering network-created, innovative technologies that protect life on earth and beyond

Our FY2022 to FY2024 strategy

Group operations will deliver significant cost reductions in a lean operating model across all our businesses to deliver an operating margin and ROIC that exceed the hurdle rates. The largest benefit is likely to occur from supply chain optimisation, which will require an advanced skill set and strong leadership.

We will implement a shared services back-office to significantly change our cost structure in SADC while aiming to create a single, integrated software solution to enable standardised business processes. The corporate centre will enhance governance, maintain strong investor relations, and attract new investors.

Agriculture [logo]

The traditional Agriculture Solutions business is not forecasting significant growth and must investigate new product and service diversification opportunities over the next 12 months to unlock additional earnings. Part of this endeavour is our AgriBio strategy, from which considerable growth is expected.

Agriculture International manufactures, distributes and exports world-class soil health and crop nutrition products with high-quality potassium humate content, which is the cornerstone of our AgriBio offering. Our key competitive advantage is the quality of the raw material from which the humates are extracted and the close proximity of this raw material to the manufacturing facility. There is a growing demand for highly concentrated humic acid globally, and it has a strong value proposition against lower-concentrated products with inferior raw material bases. Capacity and safety improvements at the Morwell plant, in Australia, have put us in a position to pursue new business aggressively. Other core offerings include fulvic acid chelation products, Australian Bull Kelp products and a biological offering (Bacstim™), through an exclusive distribution agreement.

Strategic drivers for our AgriBio business include humate quality and awareness, increased brand recognition, own production of kelp products, unique extraction methods, expansion of distribution footprints globally, diversified product offerings (distinctive blends) and greater technical support (R&D alignment). These key pillars will form the basis of advancement in the coming years and will allow a more aggressive approach to business growth.


Mining [logo]

Despite the poor forecast for South African mining (with Eskom seeking a 25% reduction in coal use by 2030), volume growth in BME is expected from an increasing market share in SADC and West Africa as well as internationally. BME has a clear competitive advantage over its local and international competitors in southern Africa, which is embedded in AN supply security, our dual salt emulsion technology, AXXIS™, underground expertise, blast design, smart trucks and more. BME needs to change its economic and pricing model in SADC to absorb changes in volume offtake, sudden mine closures, commodity price impacts and forex losses. The current model does not allow for quick reactions, resulting in low margins.

Higher growth will be pursued in the international mining market by strengthening our key account management for global mining houses and by leveraging international partnerships.

Copper, cobalt, platinum, palladium and other metals have become critical to the Green World economy, driven by the significant growth in electric vehicles (EVs) and renewable energy. This demand is underpinned by the global shift to a low-carbon economy that aims to minimise global warming. Therefore, these metals remain PMC’s primary focus, in which its core competencies are embedded. PMC will also advance its business in mine tailing recoveries.


Chemicals [logo]

Protea Chemicals must operate with lean principles to derive profit from high volume, low gross profit product distribution and returns from its significant asset base. In addition, Protea Chemicals has a strategy to build selected specialty chemicals businesses (e.g. in water treatment, consumer goods manufacturing and flue gas treatments). Overall customer service and supplier relationships must be improved to be successful. An opportunity may arise from international companies seeking to discontinue their own distribution in SADC due to the high credit risk, eroding infrastructure and the overall macro economy. This provides an opening to partner with large international players for distribution in southern Africa.


Our progress so far

Despite the challenging environment, we have made significant progress on our key priorities towards our longer-term ambitions, having implemented changes to our operational processes; realising business synergies and advancing our culture transformation:

 KEY PRIORITY  PROGRESS MADE  FY2021 to FY2027
Investing in our PEOPLE and attracting key talent to deliver and ensure we remain relevant
  • We have strengthened our management bandwidth and succession planning by means of training and development, bringing in new capabilities, and aligning our people practices including remuneration and key performance indicators to drive our culture transformation
  • Our people practices will continue to embrace diversity and inclusion.
  • Our culture must adopt in its definition the notion of “workplace” being outside offices as virtual working increases, and our care for livelihoods must include investment in reskilling and training
A leaner BUSINESS MODEL to become more agile in structures, decision making, to keep up with the ever increasing speed of change
  • Our corporate centre will focus on strategic pursuits to create flexibility and optionality through partnerships, networks, tolling arrangements or more broadly designed research programmes in collaboration with physical and virtual networks
  • We will leverage advantages from digitisation, data analytics, IoT and other technologies to increase our customer value proposition,
  • We will aim for a networked, international organisation with flat structures, supported by strong talent development and empowered decision-making, which in turn is enabled by data analytics driven insights
  • We plan to be at the forefront of technology that creates new materials, allows for operational efficiencies, and significantly changes our customers’ operations.
  • Instead of investment in large production assets that take decades to depreciate we will consider the design of smaller, more flexible production units, as already adopted in other industries
Creating SYNERGIES in the business
  • We have shifted to our new business model, establishing a cluster to drive synergies between our businesses. This has included optimising our supply chain functions, implementing shared services, revising our Group structure, and leveraging IT and process transformation for faster workflows and more insightful reporting
  • We also tested the resilience of our supply chain capabilities in the face of severe supply chain constraints and in doing so, exceeded our customers’ expectations and enjoyed success in the market relative to our competitors
  • Having deployed a Group executive to our SSB production facility, we will continue to unlock value from the pursuit of manufacturing excellence, progressed a supply chain optimisation project that has started to deliver raw material savings and cash flow benefits through improved working capital management
Focusing on ORGANIC GROWTH by investing in our current businesses and creating more sustainable practices and identify new income streams
  • Our most recent progress in this regard includes investing in the AgriBio business, expanding our BME operations internationally through capital investments and strong global partnerships
  • Geographic diversification will aim to offset the decline of Africa’s economic development
  • Sector diversification will aim to counter the climate impact and overall volatility of the agriculture and mining sectors, as well as the decline of the chemical sector
  • Investigate and create new income streams from acquisitions and joint ventures
Continue to divest from businesses that don’t fit our current PORTFOLIO or future ambition
  • We divested from Oro Agri in the past year and continue to review our core portfolio for additional growth or divestment opportunities
  • We will continue to evaluate our businesses (in our quarterly business reviews) and deliberately allocate capital to opportunities aligned with our strategic intent
Invest into our SUSTAINABILITY and SAFETY goals for competitive advantage and create a wider investment base
  • We have repositioned part of our Chemicals division to supply the growing sustainability sector such as water and flue gas treatment, green chemical supplies and specialty distribution of organic and biomolecular substitute products
  • Consistent delivery against our sustainability and safety goals. Noteworthy improvements in our energy and water-use efficiencies. Safety record in our mining business continues to be a market differentiator. Allocated R58 million capital to solar projects
  • Being part of the biotech revolution and a leader in the biological industrialisation, we will evolve from a “chemical company” to one that leverages state-of-the-art technology to create modern, sustainable solutions for our current and future customers

Capital strategy

Our approach to capital allocation has been aligned with our strategy. We are now clear on our capital allocation framework and plan, investment principles to guide any M&A decisions, and guidelines when considering the declaration of dividends. Our capital allocation plan maps the capital requirements of our current businesses to strengthen their competitive advantage and prepare for the market changes to come, as well as our need to add new revenue streams in future high-growth markets, likely through M&A activity. In doing this, we also ensure that we are a cash-generative business and restore distribution to shareholders.

The board carefully considers capital allocation decisions to ensure value accretion and provide the right diversification that is complementary to our core businesses and strengthens the overall positioning of the Group. We believes it prudent to maintain a conservative balance sheet in the current economic environment, specifically with regards to macro-economic and geopolitical risks. Retaining optionality to allocate meaningful capital in the current environment puts us in a position to be able to allocate capital to both organic and inorganic opportunities. It is not our intention to maintain a net cash position long term. If suitably attractive capital allocation opportunities are not executable over the next 12 months and market conditions stabilise, we may consider returning further cash to shareholders over and above its ordinary dividend.

Investment principles

We have set investment principles which, together with specific financial metrics, will be consistently applied to all capital allocation opportunities.

Investment principles [illustration]

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