Omnia delivers robust performance, R1.7bn profit for the year

Johannesburg - JSE-listed Omnia Holdings Limited (“Omnia” or “the Group”), today published its annual results for the year ended 31 March 2024, reporting strong cash generation, improved margins and sustained profitability against a substantial decline in commodity prices and volatile market conditions. Operating profit for the year of R1.7 billion was achieved through the successful execution of the business strategy, supported by disciplined capital allocation which delivered a more internationally diversified business with an integrated and efficient manufacturing and supply chain capability.

Omnia’s CEO, Seelan Gobalsamy, commented: “These results reflect the diligent execution of our strategy underpinned by robust capital allocation decisions which have delivered international diversification, growth of our Mining segment and operational agility. We have enhanced our resilience to economic volatility and fortified our market positioning, ensuring we remain responsive to customer needs, maintain security of supply and drive long-term stakeholder value.”

Omnia’s focus on operational excellence within its integrated manufacturing and supply chain enabled the business to increase its agility and responsiveness to win in key customer markets. This resulted in optimised inventory levels, higher sales volumes, enhanced capacity utilisation and opportunities for additional third-party ammonia derivative sales.

Volume growth achieved in Mining and Agriculture RSA and higher manufacturing throughput partially offset a greater than 50% drop in average ammonia prices, limiting the decline in revenue to 15.9%. Operating profit decreased by 12.2% to R1.7 billion, however higher profitability from the Mining segment, effective cost management and operational efficiencies enhanced operating margins to 8.0% (FY23: 7.6%).

The Group’s solid financial position was maintained through effective management of working capital which decreased from R4.2 billion to R3.6 billion, and rigorous cost control which returned healthy cash generation of R3 billion (FY23: R1.8 billion). This together with disciplined capital allocation and a release in working capital strengthened the net cash balance to R2.3 billion (FY23: R1.8 billion).

“We responsibly managed our capital during the period, successfully maintaining our strong financial position and the flexibility to invest in value accretive opportunities as well as to provide solid returns to shareholders. In line with our growth strategy and ESG commitments, we continued to prioritise safety and invested to protect our core operations, enhance our competitive advantage, drive international expansion and incorporate greener technologies,” added Gobalsamy.

Safety remains a top priority for the Group. During the year, safety standards were enhanced, resulting in a Recordable Case Rate (RCR) of 0.05 compared to 0.16 recorded in FY23. This signifies an exceptional

safety standard and culture of care at Omnia. A total of R679 million was invested in maintenance and organic growth projects with an additional R184 million and R176 million invested in Hypex Bio and our Indonesian JV respectively. Capital projects included investments in renewable energy and water treatment, leading to improved efficiencies, lower greenhouse gas emissions and higher levels of water recycling. The addition of twenty ammonia rail wagons and six road tankers to the existing fleet further enhanced the Group’s supply chain flexibility while the mobile manufacturing unit (MMU) fleet renewal and expansion programme will enable further growth in the mining business.

Omnia declared an ordinary dividend and a special dividend of 375 cents per share and 325 cents per share respectively, bringing the total distribution to shareholders for the year to R1.2 billion.

“Our team’s delivery over the past few years has been commendable. This has paved the way for our growth and sustainability targets and demonstrated our commitment to increasing shareholder value. We are pleased to have returned R4.3 billion cash to shareholders since FY20 and are confident that our ongoing efforts will support further value-enhancement in years to come.” concluded Gobalsamy.

Segmental review

Against a sharp decline and lower average commodity prices, the Agriculture segment proved resilient, achieving strong sales volumes in RSA which partially offset the effects of the commodity price environment on overall revenue and profitability. Across the rest of Africa, market diversification efforts mitigated some of the volume impact of macro-economic challenges and shifts in market dynamics, particularly in Zambia. In Zimbabwe, volumes and operating profit were lower and were adversely affected by delayed rains, declining commodity prices and persistent macro economic challenges.

The international business maintained strong margins and generated growth in export volumes to new markets. Volumes were lower overall, with exports lost in the first half not fully recovered due to customer operational issues being resolved later in the year. Investments to grow the distribution network and secure new distribution agreements were progressed, laying the foundation for future growth. The Agriculture segment reported lower revenue and operating profit of R11.4 billion and R1 billion respectively. Operating margins benefited from efficiency gains, product mix enhancements and cost management and improved to 8.7%.

The manufacturing and supply chain capability remain focused on increasing plant utilisation, enhanced demand and supply planning, and efficient working capital management which enabled the business to increase its agility and responsiveness in key customer markets. Consequently, despite supply chain challenges, the business maintained security of supply for customers and optimised inventory levels. This active management also supported higher sales volumes, enhanced capacity utilisation and enabled additional opportunities for third-party ammonia derivative sales through the year.

As the business is anticipating a shift towards more favourable weather and improved agronomic conditions in South Africa, the outlook for the Agriculture segment remains optimistic. Omnia’s Nutriology® model, designed to provide customer solutions in varying weather conditions, will play a key role in the segment’s resilience, together with initiatives to reduce costs, enhance efficiencies, and improve cash management.

In Africa, the focus remains on protecting this market and growing distribution in key regions and expanding product and service offerings to fully leverage the Nutriology® model. Taking into account ongoing regulatory and macro economic challenges, the segment continues to review its business models in the SADC region.

The segment’s strategic focus remains on driving sales volumes and further scaling growth in the international AgriBio business through distribution to global markets and a strengthened global brand presence. Several strategic initiatives are being pursued with current customers in the Asia Pacific region while marketing capabilities are being enhanced in Brazil and market reach is being expanded through new key partnerships.

The Mining segment overcame macro-economic and infrastructure challenges to deliver an exceptional performance. It achieved notable market expansion, operational efficiencies and a marked increase in operating profit and margins, reflecting the success of the international diversification strategy which is yielding results. South Africa grew volumes in a declining market, while an improved product mix in Mining Chemicals, cost efficiencies and substantially higher volume and profit contributions from the international operations in Canada, Indonesia and West Africa supported higher margins and geographic diversity of earnings.

The segment successfully developed various initiatives to deliver future international growth. New customers were acquired in the SADC region and three new contracts were secured by the JV in Indonesia. Good progress was made with trials in a significant underground operation in Ontario and plans to trial hydrogen peroxide-based emulsion at the Nairn facility in conjunction with Hypex Bio were advanced to commence in the latter part of FY25. In addition, the deployment of a detonator assembly plant in Western Australia progressed well with production anticipated to begin in the second half of FY25, and a potential site has been identified for an emulsion plant in Eastern Australia. Revenue decreased slightly to R8.3 billion while operating profit rose by 26.4% to R1 billion and margins grew from 9.3% to 12.1%.

Growth will continue to be fostered by leveraging innovative and sustainable solutions globally, while further value will be unlocked through focused management, stringent cost control, and process optimisation. Our 70-year-old brand and deep customer relationships presents a unique opportunity to grow. In Africa, multiple growth opportunities will be further developed while volume growth and notable expansion is anticipated in the Mining Chemicals sector. The segment is expected to benefit from recovery of the Uranium price in Namibia, further volume growth out of Canada and profitability improvements in Indonesia, while opportunities Australia and other global markets are being vigorously pursued.

Protea Chemicals’ performance was negatively impacted by significant challenges faced in the South African market, exacerbated by a confluence of adverse macro-economic conditions, reduced demand due to lower consumer spending and failing infrastructure. Difficulties were compounded by supply disruptions, including a prolonged unplanned shutdown at a key supplier. Segment revenue was lower at R2 billion and operating profit was challenged at R11 million. The segment remains focused on repositioning the business for sustained profitability. Management actions are being implemented to navigate the tough economic conditions and demonstrate the value of the 50-year-old brand.

Outlook

Looking ahead, global economic expectations have tempered recession fears but remain uncertain amid geopolitical tensions. With elections in over 50 countries, including South Africa, market volatility is anticipated. In South Africa, macro-economic challenges persist due to potential fiscal and political uncertainties, impacting economic activity. Nevertheless, the Group's commitment to strategic growth, operational efficiency and innovation remains firm.

The outlook for both the agriculture and mining markets globally, remains positive, underpinned by strong fundamentals. As the world's population grows, so too will the demand for food, technology, and basic materials. Food security is a critical macro-economic priority for governments worldwide, driven by population growth, climate change challenges, and geopolitical uncertainties. Similarly, the drive for urbanisation and decarbonisation supports the mining sector, driving demand for essential minerals and materials.

Omnia operates in primary markets and is well positioned to leverage these mega trends. The Group’s pursuit of sustainable growth and expansion is supported by Mining International which is set for continued volume growth and profitability by expanding existing partnerships and targeting new growth opportunities across key global markets. Growth in the AgriBio business will be driven by the transition from customer trials to commercial contracts and market expansion through investments to increase distribution capabilities. In Manufacturing, the Group continues to prioritise plant utilisation and efficiency while advancing environmental sustainability.

As Omnia marks the close of its 70th year, its dedication to long-term value creation remains unwavering, supported by a strong financial position and dedicated strategic execution.