Strong performance in agriculture outweighs Omnia’s mining slump

A better performance in Omnia’s agricultural division made up for slack in the mining division, helping the chemicals group to post a 12% rise in full-year net profit. Net profit was R664m. Group headline earnings per share rose 12% to R9.91. Revenue grew 7% R17.4bn and group operating profit was up 11% at R1.156bn. The operating margin widened to 6.7% from 6.4%.

The agricultural division grew its operating profit by 63% to R711m in the year to end-March, despite a 2% drop in revenue, which was the result of a drop in sales volumes. The agricultural segment is made up of Fertilizer RSA, Fertilizer International, and Agriculture Trading.

The improvement in the division was thanks to a strong performance from the international business — where operating profit rose 44% — a turnaround in the agriculture trading operation from a loss the prior year, and “production efficiencies”, Omnia said in its results statement on Tuesday.

Internationally, Australia and Brazil enjoyed strong growth, and Zimbabwe was “exceptional”, thanks to the political changes in the country. But operating profit in mining slipped to R387m from R454m, while that of the chemical division inched up R146m, from R143m.

“Despite headwinds in various parts of the business, the performance in the agriculture division was encouraging, the chemicals division was flat overall despite the weak South African economy, and the mining division was lower based on margin pressures and a substantial provision for a potential bad debt in Angola,” the company said.

The company declared a final dividend of R1.50 per share, bringing the total to R3.50, which was marginally up on 2017’s R3.40. The share price was little changed at R128.80 in early trade on the JSE, giving the company a market value of R8.9bn.

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