OMNIA’S STRATEGIC EXECUTION DELIVERS STRONG GROWTH AND PERFORMANCE
- Revenue from continuing operations increased by 30% to R21.4 billion
- Profit after tax from continuing operations rose by 80% to R1.1 billion
- HEPS from continuing operations up 86% to 672 cents
- Solid cash position of R2.4 billion
- Disciplined capital allocation rewards shareholders with R1.4 billion in total dividend
- Focused on driving organic and inorganic growth opportunities underpinned by safety andsustainability
Monday, 20 June 2022: Omnia Holdings Limited (“Omnia”), a JSE-listed diversified chemicals Group, today published its annual results for the year ended 31 March 2022. The results reflect an exceptional operating performance enhanced by diligent strategic execution, a higher commodity price environment and favourable conditions for both the Agriculture and Mining divisions. Group revenue from continuing operations for the period increased 30% to R21.4 billion and operating profit from continuing operations, excluding Zimbabwe increased by 123% to R1.7 billion. EBITDA from continuing operations excluding Zimbabwe also increased significantly to R2.5 billion which is an increase of 57%, while headline earnings per share (HEPS) from continuing operations rose 86% to 672 cents.
Omnia’s CEO, Seelan Gobalsamy, commented: “Our teams’ diligent execution of our strategy delivered an exceptional operating performance and placed the business in a solid financial position. Our renewed and integrated operating model, manufacturing excellence and optimised supply chain enabled increased agility and responsiveness to achieve increased sales volumes, whilst disciplined cost and working capital management further supported cash generation and enhanced profitability in a challenging macroeconomic environment.”
Omnia bolstered its competitive positioning through focused customer relationship management which was supported by the implementation of its new integrated operating model. Supply chain optimisation led to improved planning and greater flexibility which enabled reliable supply to customers. Supplier diversification and shortening of the net working capital cycle helped manage the risk of increasing and volatile commodity markets, whilst integrated manufacturing capabilities drove significant efficiencies and improved operating margins.
In keeping with its disciplined approach to capital allocation, Omnia divested from Umongo Petroleum for a cash consideration of approximately R1 billion. The proceeds from the disposal, together with improved operating cash generation across the Group, resulted in a strong cash position of R2.4 billion at year end. Notwithstanding significantly higher commodity prices, net working capital from continuing operations increased by 18% to R3.3 billion, this was supported by focused efforts to manage the working capital cycle and the introduction of supply chain finance.
After considering the financial position of the Group in the context of prevailing macroeconomic conditions, the Board declared a total shareholder distribution of R1.4 billion, comprising an ordinary dividend of 275 cents per share and a special dividend of 525 cents per share.
“Ongoing delivery against clear strategic objectives saw us strengthening our financial position, enhancing operating asset performance, improving returns on capital and investing for the future. We are steadfast on continuing to drive meaningful value creation for all stakeholders with our commitment to operate sustainably to deliver a positive impact for communities in which we operate,” said Gobalsamy.
While notable improvements in sustainability and safety measures were achieved during the year, we are saddened by the tragic events of two work-related fatalities. We express our deepest condolences to the families and loved ones. Safety remains a key priority, and the Group will continue to drive the appropriate culture to support improvements across the business in line with its pledge to achieve zero harm.
Reducing the Group’s environmental footprint remains an important focus. Key projects nearing completion include investments in alternative energy plants and a reverse water treatment project to increase water recycling. Omnia is building on its existing suite of sustainable products, technologies and services with research and development efforts centred on trialling biological and organic products for registration in South Africa and selected global markets, as well as AgTech innovations and alternative low CO2 emulsion technology.
Looking ahead, despite the volatile macroeconomic environment which is anticipated to persist for the foreseeable future, Omnia is well-positioned to deliver further value from its core business by supporting its customers in the primary sectors in which they operate. The Group will continue to explore organic and inorganic growth opportunities in key identified markets whilst targeting partnerships to reduce risk and complement the core business and its capabilities.
“Reflecting on our journey to date and the substantial transition that Omnia has undergone as part of our strategy to stabilise, fix and grow the business; I am incredibly proud of the strong position our teams have created which will enable Omnia to take advantage of value accretive growth opportunities, navigate headwinds and continue to honour our commitments to stakeholders,” concluded Gobalsamy.
The Agriculture segment, delivered a 44% increase in net revenue from continuing operations excluding Zimbabwe to R11.2 billion and a more than doubling in operating profit from continuing operations excluding Zimbabwe to R1.2 billion. Favourable planting conditions and higher average agriculture commodity prices led to increased sales volumes while optimised procurement and production efficiencies supported the robust performance.
In the RSA division, risk of supply was well managed to ensure the division was in a strong position to meet sudden demand, whilst a focus on manufacturing quality products and optimisation enabled competitive pricing to customers. The benefits of Omnia’s diversified portfolio were demonstrated by sustained increased offtake from the Mining division, which in combination with higher trade sales into the mining sector, resulted in increased plant utilisation, improving margin and profitability.
In the international division logistics globally remained a challenge due to the reduced availability of shipping capacity. Local demand for biostimulants in Australia was stable and customer demand was met despite logistics constraints. Sales into new territories in Brazil boosted revenues and margin growth from that region, whilst the SADC region benefitted from a focused market approach and a broader offering. Distribution and administration costs as well as a fixed price contract in Zambia did, however, place pressure on margins in the international business.
Looking ahead, customers are expected to adopt a cautious approach to early purchase commitments for the coming season which together with higher commodity prices, may require increased stock levels. These demand dynamics will be carefully monitored, and production plans will be appropriately aligned to respond to changing customer needs.
Consolidation and growth initiatives that have gained momentum will be prioritised across the SADC region. Demand for biological products and technology solutions has been stimulated by technological advancements and adoption in the agriculture sector. Omnia looks to capitalise on these developments and remains focused on expanding its global biostimulant footprint through new distribution channels and strategic international partnerships. The Group’s investments in increasing humates production capacity will service this demand.
The mining segment delivered a 29% increase in net revenue to R6.7 billion supported by an increase in sales volumes in South Africa and the rest of Africa and a higher ammonia price environment. A renewed focus on operating efficiencies drove an operating profit increase of 79% to R514 million.
Mining RSA delivered a robust performance despite a highly competitive environment and lower mining production due to inclement weather for most of the second half of the year. Operational efficiencies, market expansion in the surface and underground segments and gains from large customer contracts underpinned the solid performance.
Mining production in Indonesia and SADC was also disrupted by inclement weather. Notwithstanding the volatile macro-environment, compounded by the impact of the Russia-Ukraine conflict and global supply chain challenges, the international division ensured that security of supply was maintained. Majority of a large customer contract was retained in Zambia which contributed to the increase in volumes while sustainable localised business partnership models were implemented in the rest of SADC and a three-year contract extension was secured with the division’s largest customer in West Africa. In Canada, trials of technology and explosives systems in the underground market were successfully run and the transitioning for a major surface contract was commenced to begin operations in the new financial year.
Protea Mining Chemicals (“PMC”) strong performance was supported by robust growth in the battery metals and PGM markets, which reinforced demand for its specialised metallurgical chemicals and services. Increased sales of high-performance products and solutions in export markets, demonstrated sound supply chain management and security of supply for customers.
The mining segment remains agile and well positioned to continue overcoming challenges to deliver its diverse and reliable product and service offering to its customers. Current higher metal commodity prices bode well for mining production globally while some countries in SADC have seen a revitalisation of their mining activities resulting in strong demand. Growth in Indonesia remains a focus and the Canadian team is working hard to secure longer-term customer contracts. The new AXXIS Titanium and Silver products have been well received by the Australian market where new opportunities are being evaluated. The division will continue to grow business through its world-class electronic detonators and emulsions whilst developing technology that contributes to customers’ sustainability and ESG targets.
Net revenue from continuing operations increased 2% to R3 billion and operating profit from continuing operations increased 41% to R142 million. Notwithstanding COVID-related supply chain challenges, shortages in chemicals in the second half and higher energy costs, Protea Chemicals delivered a resilient performance. The repositioning of the Chemicals segment in the first half of the year to focus on key strategic sectors and customer service, saw the business deliver a substantially improved performance. This was underpinned by the strength of Protea Chemicals’ supply chain capabilities, distribution footprint and ongoing transition to specialty chemicals and associated services.
Certain sectors within the business segment were affected more than others by COVID-19. Demand was maintained in the Hygiene and Health Care, Food and Pharma, and the Building and Construction sectors while the profitability of the Agri Science business improved due to robust demand. The Life Science sector increased volume in the Food and Beverage sub-sector and a strong performance was delivered by the Watercare Solutions sector due to increased demand for coagulants on the back of the heavy rains across South Africa. Higher margins were supported by an improved specialty-functional chemical product mix and disciplined cost containment which improved operational efficiencies. Umongo was sold effective 31 January 2022 and delivered net revenue of R1.3 billion for the ten months of the year.
After its restructure and repositioning, Protea Chemicals is now focused on specialty chemical products and solutions to deliver value for its customers across key sectors, which combined with a reliable and cost-effective supply chain, is anticipated to unlock growth. The development of green, environmentally friendly and alternative chemistries and technologies across key sectors is gaining momentum while collaboration with partners in the hydrogen fuel cell market in the region is ongoing and HydroPlus® continues to be produced for this purpose.
Download the Omnia_Results_Booklet_June 2022
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