Final results for the year ended 31 March 2012
- Published: Tuesday, 26 June 2012 08:00
Record results lay foundation for further growth
Commenting on the results, Omnia MD, Rod Humphris said:
“This year has been a landmark year for Omnia. We completed our new R1.4 billion nitric acid complex - on time and below budget – which will provide a solid base for Omnia’s next growth stage, especially in our Mining and Agriculture divisions. The financial benefits of our balanced and diversified portfolio of complementary chemical services businesses were clearly demonstrated. Strong profit growth in our Mining Division more than compensated for the small improvement in our Agriculture and Chemicals division.
“Our continued focus on higher quality revenues, operational efficiency, cost control and good cash management delivered strong operating profit and cash flow.”
In the light of the better than expected cash flow, the improved earnings, the strong balance sheet and the commissioning of the new nitric acid complex, the Board is pleased to resume dividend payments a year ahead of expectation.
· Profit for year up 39% to record high R629 million
· Revenue up 16.8% to R10 945 million
· Operating margin up from 7.3% to 8.1%
· Headline earnings up 25% to 959 cents (2011: 767 cents)
· Debt: equity ratio at 19% after capex on new nitric acid complex (2011: 10.2%)
· Cash flow generated from operating activities was R531 million (2011: cash utilised of R109 million)
· Declared a final dividend of 180 cents per share, which, together with the interim dividend of 100 cents per share provides shareholders with a total dividend this year of 280 cents per share.
· New nitric acid complex commissioned on time and within budget
· Buoyant growth from Mining division, particularly outside South Africa. BME and Protea Mining Chemicals both showed excellent volume growth as mining expanded throughout Africa.
· The Agriculture division showed good volume growth. Fertilizer prices increased steadily over the course of the year, reflecting the same trends seen in international markets, where demand continues to outstrip supply.
· Chemicals division remains under pressure due to the difficult manufacturing environment. This includes a relatively strong exchange rate, restrictive labour legislation and significant increases in electricity costs.
· To date, the Group has generated more than 1 million certified carbon credits - a first in Southern Africa.
The macro environment for this year was exceptionally good for our Mining division, positive for our Agriculture division and difficult for our Chemicals division. Global economic performance was somewhat mixed, with good growth in emerging economies and a moderate recovery in the USA economy being offset by substantial turmoil in the Eurozone economies. The net impact was continued strong demand for mining commodities, while the mining and agricultural commodities experienced moderate price increases and minimal price increases were evident for chemical products. The rand was strong against the US dollar in the first half, which negatively impacted all our divisions’ selling prices and margins. Rand weakening in the second half benefited our Mining division, but was too late in the season to fully benefit the Agriculture division, whereas the benefit to the Chemicals division was offset by the drop in international chemical prices. Despite low interest rates, economic activity levels in the South African manufacturing sector remained muted due, 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.
On the outlook, MD, Rod Humphris added:
“The macro environment for next year appears promising, but it will be strongly influenced by the direction of the global economy and the rand. Recent rand weakness will benefit the Group and its customers. Interest rates are expected to remain at current levels for most of next year, while inflation is expected to be contained within the 6% limit set by the SARB.”
The Mining division anticipates further volume growth across the division’s entire product range. The Agriculture division anticipates favourable conditions as agriculture product prices are expected to remain at high levels. This should support generous planting levels which, combined with rising international fertilizer commodity prices, bode well for next year. The Chemicals division is expecting 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.
The benefits of the new nitric acid complex will contribute to earnings for the first time in the coming financial year.
“We have a strong balance sheet, which provides a solid foundation for future investment in the business,” Humphris concluded.
For more information contact Omnia Group: 011 709 8850
Rod Humphris, Managing Director
Noel Fitz-Gibbon, Finance Director
Issued by Brunswick: 011 502 7300
Taryn Wulfsohn 0832731301