Durban - The recent acquisition by Omnia of Prochem, the chemical distribution group, would reduce earnings volatility because it had given the chemical services group exposure to a wide range of industries, reducing its dependence on the agricultural sector, an analyst said yesterday.
"Going forward, the group's fertiliser division, which previously accounted for about 80 percent of turnover, is expected to decrease its contribution to 45 percent, while chemicals will comprise about 40 percent," the analyst said.
"The rest will be contributed by the explosives unit, which supplies the mining sector."
Schalk Lubbe, the chief executive of Omnia Fertilisers, confirmed the acquisition had given the fledgling chemicals unit critical mass, which would "nicely balance" its three divisions.
Omnia has operations in Zimbabwe, Zambia, Mozambique and Mauritius as well as in South Africa, and has just opened an office in Malawi.
The group recently issued a trading update to the effect that its headline earnings for the year to March would be up to 10 percent lower than last year's.
Omnia's headline earnings a share for 2003 were up 122 percent. The company will release its results next Monday.
Omnia rose 5c to R29.95 in Johannesburg yesterday, while the sector lost 0.4 percent.