JSE-listed chemicals group Omnia has reported a 17% increase in operating profit to R802-million for the six months ended September 30, which CEO Seelan Gobalsamy says was driven by solid performances in the group’s mining and agriculture segments.

These segments also supported an improvement in Omnia’s operating margins from 6.5% in the prior comparable six months to 7.3% in the reporting period.

The group’s headline earnings a share increased by 2% year-on-year to 288c.

Gobalsamy points out that the mining segment continues to demonstrate significant potential for growth, underpinned by increasing demand for solutions and expanding opportunities in global markets.

He adds that Omnia’s integrated operating model with agile manufacturing and supply chain capabilities, yielded positive results in the six months under review, having facilitated higher sales volumes and enabled effective balancing of demand and supply across segments to enhance margins.

Omnia is undertaking upgrades to enhance reliability and production throughput at its Sasolburg manufacturing complex, while continued investments in the group’s ammonia value chain have also ensured consistent supply for customers.  

Gobalsamy says the group’s balance sheet, notably its net cash balance of R812-million, is strong enough to support international expansion and future growth aspirations, which the company is confident will realise.

In the meantime, Omnia is focused on investing in infrastructure to enhance efficiencies and margins across the group, including renewable energy generation capacity and improved supply on road and rail.

“The construction of additional ammonium nitrate storage in Sasolburg will double our storage capacity, strengthen supply to customers and increase supply chain flexibility,” Gobalsamy states.

An additional 5 MW of renewable-energy capacity is being built at Sasolburg to take the peak installed capacity to 15 MW, which will increase the proportion of renewable energy used in operations up to 50% of electricity consumption.

MINING

Omnia’s mining segment achieved strong growth in the reporting period on the back of extended and new contracts and increased ammonia derivative sales.

The segment’s operating profit grew by 18% year-on-year to R535-million, with it having effectively navigated global macroeconomic challenges and supply chain constraints.

In the Southern African Development Community (SADC) region, volumes increased owing to higher iron-ore and platinum output, new contract wins, and strong contributions from Zambia and Namibia.

West Africa, in turn, benefited from positive contributions in the precious metals sector.

Although Omnia performed weaker in Canada, its in-country presence has been enhanced through the commissioning of a non-electric detonator plant, while the group managed to increase volumes and secure new contracts in Indonesia.

Gobalsamy says Omnia’s organic growth strategy and infrastructure development in Australia are progressing well with the commissioning of a detonator plant being underway, with production expected by the fourth quarter of the 2025 financial year, while the BME Metallurgy business is making strides with business growth in Namibia.  

AGRICULTURE

Omnia’s agriculture segment delivered a resilient performance in the six months under review, despite a challenging operating environment marked by infrastructure and supply chain constraints, as well as severe drought conditions in the SADC region.

Despite revenue having been 4% lower year-on-year at R5.1-billion, as lower selling prices offset higher volumes, the segment’s operating profit increased by 27% year-on-year to R422-million.

In South Africa, favourable weather and agronomic factors, combined with enhanced marketing efforts, supported higher volumes although selling prices were lower.

Broader African markets, especially Zambia and Zimbabwe, faced constrained demand owing to severe drought conditions and were challenged by regulatory and competitive pressures. However, some volume recovery was achieved through market channel diversification.

Internationally, Omnia continues to invest in growing its distribution footprint in the US and Brazil.

Moreover, volumes in Australia increased from strong exports owing to the recovery of two key customers following disruptions in the prior period, robust domestic demand, new contract gains, and expansion into markets in Europe and Southeast Asia.

In turn, volumes in Brazil were hampered by one of the most severe droughts the country has witnessed.

Gobalsamy says Omnia’s manufacturing and supply chain capability supported higher sales volumes and enhanced margins in the agriculture segment, and he is optimistic about improved agronomic conditions in Africa, particularly higher demand in South Africa. 

Looking ahead, Omnia is focused on leveraging its Nutriology model in the agriculture segment, optimising product mix and achieving operational efficiencies.

Operating model changes in the African markets are being implemented, with volume growth, cost savings, efficiencies and cash management expected to drive performance further in the second half of the financial year.  

CHEMICALS

Omnia’s chemicals segment continued to face significant challenges in the South African market in the reporting period owing to difficult macroeconomic conditions and a subdued manufacturing sector.

Increased competition led to margin pressures across the product range, while persistent pricing pressure further strained profitability.

Operating profit was also negatively affected by restructuring costs, resulting in an operating loss for the period.

“We expect tough conditions to persist in the second half of the year. Management remains focused on executing the segment’s turnaround plan to achieve sustainable profitability over the medium term,” Gobalsamy concludes.