• Revenue from continuing operations, excluding Zimbabwe, increased by 19% to R11.6 billion
  • Operating profit from continuing operations (excluding Zimbabwe) up 47% to R1.1 billion
  • Adjusted HEPS from continuing operations rose 32% to 401 cents
  • Strong financial position maintained through prudent cash and capital management
  • Enhanced operating performance underpinned by successful implementation of operating model
  • Progress made on ESG objectives with the commissioning of reverse osmosis and solar energy plants

Tuesday, 22 November 2022: Omnia Holdings Limited (“Omnia” or “the Group”), a JSE-listed diversified chemicals Group, today published its interim results for the six months ended 30 September 2022. This exceptional financial performance was achieved despite ongoing international geopolitical conflict and supply chain challenges, which was exacerbated by deteriorating utility infrastructure, socio political instability, and disruptions to electricity supply in South Africa.

Omnia’s CEO, Seelan Gobalsamy, commented: “Against a complex and challenging macroeconomic backdrop, our teams have delivered an exceptional performance, leveraging the underlying strength of our business model to execute our strategy. Our supply chain optimisation programme and integrated manufacturing capabilities supported the Group’s competitive position, agility, and responsiveness in a dynamic market environment to deliver to our Agriculture, Mining and Manufacturing customers. This unlocked efficiencies which enhanced margins and profitability.”

The successful implementation of the Group’s operating model resulted in improved performance and ensured the security of supply of ammonium nitrate, despite ammonia supply constraints, to enable the Group to meet customer demand across all business segments. Additional key performance drivers include an improvement in the volume-margin mix, greater sales of specialty and value adding chemicals, in an elevated commodity price environment.

Group revenue from continuing operations (excluding Zimbabwe) increased 19% to R11.6 billion. Operating profit from continuing operations (excluding Zimbabwe) rose by 47% to R1.1 billion with the operating margin from continuing operations (excluding Zimbabwe) growing from 7.5% to 9.2%. EBITDA from continuing operations (excluding Zimbabwe and impairments) increased by 30% to R1.4 billion and adjusted headline earnings per share (HEPS) from continuing operations was 32% higher at 401 cents.

Working capital increased to R5.2 billion, driven by high commodity prices and increased investments in inventory, largely in the agriculture segment due to a more normalised sales cycle. Sales volumes have increased in the second quarter and working capital is expected to unwind for the full year. After investing R2.1 billion in working capital, the Group maintained a positive net cash balance of R140 million excluding lease liabilities. This resulted in Omnia being able to meet supply to its customers in a tough and challenging environment.

“Our continued focus on cost discipline, stringent working capital management, and prudent capital allocation saw us maintain a strong balance sheet, while investing for the future. In line with our commitment to lower the environmental impact of our operations, we invested in a reverse osmosis water treatment plant and a solar energy plant at our Sasolburg operations, both of which were recently commissioned,” added Gobalsamy.

The reverse osmosis water treatment plant, which was commissioned in August 2022, treats cooling water blow down to produce potable water which is reused in the manufacturing process. This results in reduced effluent discharge and saves approximately 180 megalitres of potable water per annum.

Commissioned in October 2022, Sasolburg’s solar energy plant generates five megawatts of electricity. Together with the electricity generated from excess process steam at the nitric acid plants, the site's own energy generation will average between 25% and 35% of the annual electricity requirement with the potential to increase in future. In addition, the EnviNox® emission abatement system in Sasolburg resulted in a 31% reduction in carbon emissions.

The Group’s recordable case rate improved from 0.35 in the comparable period to 0.20, this is an important performance indicator of the Group’s managed interventions to deliver improvements to people and process safety across its operations. Safety remains Omnia’s number one priority and the Group continues to drive a safety-first culture in line with its pledge to achieve zero harm.

“Over the last few years, we have made solid progress against our ESG and performance targets but there is more that can be achieved in these areas. We are steadfast on unlocking further value and delivering on our growth strategy, both within our core operations and through inorganic international opportunities that are being explored. By focusing and harnessing our drive, resilience, and teamwork, we aim to create a stronger business that delivers sustainable value for all stakeholders, in line with our purpose of innovating to enhance life, together creating a greener future,” concluded Gobalsamy.

SEGMENTAL REVIEW

Agriculture

The Agriculture segment (excluding Zimbabwe) delivered a 17% increase in net revenue to R5.8 billion, supported by growth in the AgriBio business and elevated commodity prices. Volumes reduced compared to the prior period, largely due to South African farmers buying inputs later in the season in anticipation of softening commodity prices, inclement weather delaying harvesting, and the deferred contract process in Zambia. Operating profit rose 34% to R658 million owing to the segment’s focused strategy on optimising margin mix, which was supported by efficient manufacturing facilities and an agile supply chain.

Manufacturing’s focus on quality products and optimisation enabled the business to market superior offerings at competitive prices. Sustained offtake from the Mining segment, in combination with trade sales, contributed to higher plant utilisation, positively impacting margins and profitability. Operations in the SADC region benefitted from a broader product offering targeting different customer segments, while the international business continued with its global distribution drive of AgriBio products - achieving increased volumes in Brazil and securing new volumes in South American markets.

As the southern hemisphere planting season commences and notwithstanding the ongoing volatility in the agricultural sector, the segment’s outlook remains positive. Good agronomic conditions and a buoyant commodity price environment should see an overall increase in demand.

Mining

A supportive commodity price environment enabled the Mining segment to achieve a 32% increase in net revenue to R4.3 billion, and a 44% rise in operating profit to R359 million. This was partially offset by above inflationary input cost increases and lower volumes, amplified by inclement weather, industrial action, regulatory challenges and loadshedding. The strained mining and manufacturing sectors in South Africa constrained used oil supply, a key input in the segment’s emulsion explosives, which adversely affected margins. A new used oil collection strategy was implemented which included broadening the supplier network and commissioning a new processing facility.

The local team successfully secured multiple contract extensions and gained new business in surface and underground mines. Internationally, supply chain disruptions resulted in higher input costs in West Africa. Several new mining contracts were secured in the SADC region and in Namibia a sizeable customer renewed its contract. In Botswana, a distributor model with a local partner was finalised. An active growth strategy through a hybrid of partnering and direct access to market in Australia continued to be pursued, while the Indonesian partnership is in its final stages of execution. Good progress has been made in establishing manufacturing facilities in Canada and mobilising for a customer contract.

Sustaining continuous technology improvement, test results from the latest electronic delay detonators confirmed product stability and performance. The first blast of these detonators outside of South Africa, was accomplished in Lesotho followed by market entry into Australia.

Protea Mining Chemicals (“PMC”) delivered a strong set of results with volume and profit growth in SADC. The provision of technical solutions to key markets combined with the business’s ability to successfully overcome supply challenges underpinned this strong performance.

Nitrogen is an important input in the mining explosives value chain and customers are anticipated to prioritise supply security going forward, which should stand the Mining segment in good stead. Sales volumes are expected to be buoyant in South Africa and SADC. Globally budget trends show further signs of recovery with improving exploration spend in the segment’s high growth markets of North America, Australia and Indonesia. The second half of the year is expected to show a rise in volumes and improved margins through cost reduction and the recovery in used oil availability.

The Mining segment continues to embrace ESG priorities, through the ongoing pursuit of optimisation of the mine-to-mill process to serve both sustainability and production imperatives. Through partnering with customers, the business is well positioned to deliver market relevant capabilities. Growth in global demand for clean energy is accelerating the reopening of mining operations in SADC, and PMC is well positioned to deliver chemicals and mining explosives to these customers, providing the applicable on-site support and supply chain services.

Chemicals

The Chemicals segment’s net revenue remained stable at R1.4 billion, as momentum was gained in transitioning to a specialty chemicals business across key sectors of the market. Operating profit more than doubled to R104 million - benefitting from product-mix improvements across the business, with the emphasis placed on building a portfolio of high-performance specialty and environmentally friendly products and solutions to supplement traditional chemistries. Successes were achieved in the agriculture, consumer care and industrial sectors, with advances being made in biodegradable cleaning and coatings chemicals.

Reliability of supply to customers was a key focus area and proved to be a core competence for the business as it mitigated the effects of supply chain disruptions, service provision challenges by power and water utilities, and other socio-political factors. Good progress was made in implementing the sector-specific business model designed to drive expertise-based unique customer and principal relationships. This remains a key focus in the period ahead and is an underpin to continued security of supply.

Looking ahead, growth in targeted sectors is anticipated as the expansion and extension of the speciality products portfolio gains further traction, and should provide a sustained uplift in margins and profitability. In the medium term, the development of green, environmentally friendly alternative chemistries and technologies across the sectors remains a major strategic focus area for the business.

ENDS

Financial Communications Advisor:
Instinctif Partners

Louise Fortuin
+27 (0)71 605 4294
Louise.fortuin@instinctif.com

NOTES TO EDITORS:

Omnia, established nearly 70 years ago, is based in South Africa, and listed on the Johannesburg Stock Exchange. We operate in 25 countries and are expanding our presence across SADC, North America, Canada, Brazil, and Australasia. Internationally recognised for our innovative research and development, we stand apart based on our leading supply chain and manufacturing capabilities and specialised customer solutions. Our solutions and leading-edge technologies are offered to clients in the agriculture, mining, water, consumer care, food and pharmaceutical, coatings and manufacturing sectors.

We are a purpose driven business - innovating to enhance life, together creating a greener future. We operate in primary sectors and have a significant impact on food, water and mineral security. We sustain livelihoods by creating employment and opportunities for growth, apply technology for efficient use of natural resources and care deeply about the future of our planet – always acting in a sustainable manner.

Omnia Nutriology® offers agriculture producers a partnership in the science of growing from soil, to crop, to harvest and beyond. We strive for agricultural excellence in product quality, customer relationships, modern facilities, and the latest technology. Our agriculture segment manufactures and trades in granular, liquid, direct application ammonia and speciality fertilizers for farmers, co-operatives, and wholesalers throughout South Africa, Southern and East Africa and to select markets in Australasia, Brazil, and the USA. The team of Omnia agronomists ensure that fertilizer solutions are tailor-made according to specific soil types and requirements with bespoke nutrient solutions. We also offer a unique range of AgriBio products and value-added services and solutions to improve soil conditions, crop health and yields in a sustainable and environmentally conscious way.

Our Mining segment is a leading global manufacturer and supplier of explosives, related accessories and blasting services for mining and quarrying. We were established in 1984 and joined the Omnia stable in 1987 on the strength of our new cold emulsion technology that is now an industry standard. Today we supply cutting-edge products and services to meet customers’ needs at every stage in the explosives supply chain, including Mining Chemicals used in processing and recovery plants and a suite of value-added services across the African continent.

Protea Chemicals is a long-established and well-known manufacturer and distributor of specialty, functional and effect chemicals, polymers and other value-adding services and solutions. The segment relates to both the local and (the smaller) international components sectors into which the business supplies a range of specialty and industrial chemicals, technical and product application support and safety, health, environment, and quality (SHEQ) related services include water, agricultural, industrial and life sciences.