Seventy-year old Omnia Holdings, the diversified chemicals group, lifted its dividend 36% to 375c in the year to March 31 after it produced another set of strong results in a very challenging environment, CEO Seelan Gobalsamy said yesterday.
The board of the diversified chemicals group was seeking shareholder approval for a share repurchase of up to 10% of the shares, or up to R500 million of share repurchases, he said in a telephone interview.
On the availability of fertiliser to the local market, something that had been of broader concern last year due to global and local supply chain constraints, Gobalsamy said commodity prices had “fallen precipitously” and commodity supplies were now “fairly stable”, but there remained concerns around local transport infrastructure.
Revenue increased 24% to R26.6 billion, while operating profit was 19% higher at R1.9bn. Net cash decreased 23% to R1.8bn. Headline earnings per share increased 10% to 742c.
Despite the good results, the share price fell 5.38% to R60.27 early yesterday afternoon. The price, however, is still higher than the R55.01 it traded at three months ago.
Omnia has been in a tax dispute with the SA Revenue Service (Sars) for some time and on September 30, Sars partially allowed the group’s objection to additional tax assessments raised in the 2014 to 2016 years, resulting in a reduction in the original assessments.
The group lodged an appeal and alternative dispute resolution (ADR) proceedings had begun.
Gobalsamy said they had made sufficient provisions for the dispute on the balance sheet a few years ago.
The Agriculture segment’s revenue increased 31% to R14.7bn. Operating profit increased 2% to R1.25bn.
The Mining division lifted revenue 28% to R8.5bn, while operating profit increased 54% to R790 million.
The Chemicals segment revenue fell 8% to R2.75bn and its operating profit decreased 7% to R132m.
Gobalsamy said they had executed the strategy and ensured security of supply for customers, while investments in sustainability initiatives enhanced safety and reduced the environmental footprint.
He said the revenue and profit decline in the Chemicals segment was disappointing but it was nevertheless a good result when viewed over the longer term.
He said the decline had been due to an overall decline in the manufacturing sector, and one-off costs.
He said management had been enhanced in the segment and he anticipated an improvement in performance.
Group working capital increased by R905m to R4.2bn, mainly due to higher receivables from later sales in Agriculture SADC, and elevated levels of inventory for Mining International in west Africa, where the focus was on security of supply.
This, with a focus on cost management and disciplined capital allocation, ensured a robust financial position and a positive net cash balance of R1.8bn, said Gobalsamy.
Enhancing distribution capacity in Brazil and a shift in sales mix to higher margin speciality products had led to growth in the AgriBio business.
“We are engaging with potential distributors in the US and are at an advanced stage of registering certain products in the EU,” he said.
Omnia’s Mining segment was mobilising its first surface mining contract in Canada. The group believed its new generation AXXISTM system, along with new business, would support robust growth in the region, a statement said.
In Indonesia, a joint venture partnership with PT. Multi Nitrotama Kimia (MNK) was concluded. This would allow Omnia to introduce its AXXISTM systems and double salt emulsion technology to the south-east Asia market.
He said in the year ahead, Omnia would continue to expand offshore, and invest in areas to protect its business and market shares, such as in supply chain enhancements, additional train wagons, and in lowering the environmental impact of its operations.
In the past year the group invested in a reverse osmosis water treatment plant and a solar energy plant in Sasolburg.
The reverse osmosis plant was resulting in a potential saving of about 180 megalitres of potable water per year.
The first phase of Sasolburg’s solar energy plant generates five megawatts of electricity and another five megawatts was under construction.
Together with electricity generated from excess process steam at the nitric acid plants, the site’s own energy generation would likely average between 35% and 50% of its annual electricity requirement.
BUSINESS REPORT