Omnia’s agriculture and mining units drive first-half earnings

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ExpandOmnia CEO Seelan Gobalsamy has attributed the strong first-half performance to disciplined strategy execution across the group’s diversified portfolio and the resilience of its integrated manufacturing and supply chain capabilities. Picture: Business Day/Freddy Mavunda Omnia Holdings has reported its HEPS grew by a quarter in the first half despite geopolitical uncertainty, global supply chain disruptions and commodity price volatility.

The fertiliser and explosives group on Monday reported a 2% rise in revenue to R11.4bn, while operating profit increased 26% to R1.1bn.

Earnings before interest, tax, depreciation and amortisation (ebitda) were up 21% to R1.4bn. HEPS rose 25% to 399c.

CEO Seelan Gobalsamy attributed the strong performance in the first half to disciplined strategy execution across the group’s diversified portfolio and the resilience of its integrated manufacturing and supply chain capabilities.

Growth in operating profit was supported by cost management, portfolio diversification and agile sourcing.

“Our strong financial position provides a solid base from which to allocate capital toward strengthening our core operations and pursuing growth opportunities across agriculture and mining,” he said.

Revenue in the agriculture unit declined 4%, but operating profit increased 13% to R517m.

The group described the unit’s performance as “resilient”, despite lower volumes and global supply disruptions. Higher average selling prices reflected the impact of the Middle East conflict on commodity input prices, and improved manufacturing contributions supported the performance.

Agriculture RSA achieved higher operating profit and margin through higher selling prices, improved manufacturing contributions and cost discipline, despite deferred purchasing decisions amid softer grain prices, elevated input costs and weather uncertainty.

Rest of Africa delivered revenue and operating profit growth, led by increased prices and volumes in Zambia, despite higher transport costs and foreign exchange losses compared with prior-year gains.

Agriculture International delivered a mixed performance, with stronger domestic volumes and production in Australia, offset by liquidity and credit challenges in Brazil and constrained exports. The distributor-led model in the US supported volume growth.

“The agriculture segment remains well positioned, supported by differentiated offerings and integrated manufacturing and supply chain capabilities. Softer crop prices, elevated input costs and the prospect of drier El Niño conditions may weigh on demand and margins for the remainder of FY27,” it said.

Mining revenue increased 11% and operating profit increased 15% to R655m, supported by higher volumes in South Africa and Namibia and operational efficiencies.

Operating profit and margin increased despite input price volatility linked to the Middle East conflict, softer commodity markets, operational disruptions and continued investment in international infrastructure.

Mining South Africa’s volumes increased through new contract wins and extensions, a strong Northern Cape performance and cost containment supporting earnings growth.

Blasting Solutions performed strongly across the Southern African Development Community, though the diamond market remained under pressure. Mining International’s revenue increased marginally, while operating profit declined due to disruptions in West Africa, infrastructure development in Canada and Australia and a weaker metallurgy performance.

The chemicals division reported a 14% decline in revenue, but operating profit increased more than 100% to R97m, supported by a streamlined cost base, higher profitability in the Water Care business and gains from asset disposals.

Omnia continues to dispute additional assessments raised by the South African Revenue Service after the transfer pricing audit relating to the 2014 to 2016 years of assessment.

After extensive engagement, Omnia terminated the alternative dispute resolution proceedings in August as it was unable to reach an equitable resolution of the matter with the tax authority.

“The group continues to pursue resolution of the dispute, including through the mutual agreement procedure and remains open to a negotiated settlement, while retaining the option of pursuing litigation should a satisfactory resolution not be reached,” it said.

Gobalsamy said shareholder support for the proposed transaction with Solar Industries marks a significant milestone in the group’s growth journey.

In September Omnia received a R22bn offer from Indian conglomerate Solar Industries. Solar, which set up a base in South Africa a decade ago, made an unsolicited offer for Omnia, which makes financial sense for the group and opened possibilities of accelerated growth on Solar’s balance sheet.

“The proposed combination offers the potential to accelerate our international expansion through greater market access, manufacturing capabilities and innovation. Throughout this process, our focus remains firmly on serving customers with excellence, growing cash generation and creating long-term value for all stakeholders.” Gobalsamy said.

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