Omnia Managing Director Rod Humphris at their Johannesburg offices.

Omnia Holdings (OMN) has reported diluted headline earnings per share of 527.0 cents for the six months ended September 2012 from 346.1 cents a year ago. The group declared an interim dividend of 150 cents per share - up from 100 cents a year ago.

Group revenue rose 21.5% to R6.017 billion on the back of strong volume growth in the Mining division and good sales price increases in the Mining and Agriculture divisions‚ it said on Tuesday.

Gross profit increased 26.9% to R1.316 billion and improved to 21.9% of revenue from 20.9%in 2011 due to improved gross margins in the Mining and Agriculture divisions being partially offset by reduced margins in the Chemicals division.

Operating profit increased 55.8% to R547 million on the back of the improved operating margins of the Mining and Agriculture divisions‚ offset by a reduction in the operating margin of the Chemicals division.

The Mining division improved its operating margin to 16.7% from 13.6% as a result of an improved gross margin and operating leverage. The Agriculture division operating margin improved to 8.6% from 5.7% due to improved gross margins arising from the operation of the new nitric acid complex.

The Chemicals division operating margin reduced to 1.4% from 3.4% despite overhead costs being contained at the prior year level due to a reduction in the gross margin percentage.

Looking ahead‚ Omnia said the macro environment for the second half appears promising‚ but it will be strongly influenced by the direction of the global economy and the rand.

Recent further rand weakness will benefit the Group and its customers.

“Our Mining division anticipates maintaining the level of first half volumes in the second half and continued high prices for ammonia based products. Our Agriculture division anticipates favourable planting conditions as agriculture produce prices are expected to remain at high levels. Margins will continue to be positively affected by the benefits of the new nitric acid plant but will be negatively affected by the unfavorable urea to ammonia ratio‚ which is approaching historic lows‚ caused by the ammonia prices increasing at a much higher pace than the urea price‚” it said.

Ammonia is the key feedstock used to produce nitrogen fertilizer‚ whereas the sales price of nitrogen fertilizer is determined by the urea price.

“ Our Chemicals division is expecting to improve its performance in the second half but is not likely to better the operating margin achieved in FY2012‚” it added. - I-Net Bridge