JOHANNESBURG – South African chemicals and fertiliser producer Omnia on Tuesday reported a loss of R112 million for the first half of the 2019 financial year, compared with a profit of R285m for the same period in the prior year.
Omnia cited the bad revenue performance in its agriculture division and the volatility of the rand against the US dollar.
The group made a lucklustre operating profit for the six months to September of R97m from R488m the previous year, but said it expected to see an improvement in the second half.
The agriculture division reported a R37m operating loss, compared to R111m profit in the previous period, driven by the delayed start to the planting season and margin pressure and foreign exchange losses on hedging the inventory position.
Group managing director Adriaan de Lange said several factors had impacted the Omnia group.
"Our Agriculture division was once again affected by the normal seasonal volatility in various geographies and general uncertainty in the sector," he said.
"This was coupled with unrealised foreign exchange losses under the hedging programme that will be offset by gains realised on cheaper inventory on hand when sold in the second half of the financial year."
Group revenue increased by 12 percent to R8.6 billion, due to the first-time inclusion of Umongo Petroleum's revenue of R559m and Oro Agri's revenue of R279m as well as a good performance in maintaining and growing the customer base of the existing business. Excluding the acquisitions, revenue was up just 1 percent.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) for the six-month period was 40 percent lower at R412m.
Despite the loss reported in the period, the group declared an interim dividend of 75 cents per share out of retained earnings in anticipation of a profitable second-half and full-year performance.
De Lange said the revised group strategy would position it to deliver improved performance. The largest initiative was the construction of the new Nitrophosphate plant at Sasolburg which was expected to improve the financial performance in the next financial year.
De Lange said inventory levels in agriculture were well positioned to supply the market on the arrival of the first rains and were expected to decrease rapidly towards year-end.
While a stronger half in both agriculture and mining divisions was expected, the remainder of the year was expected to remain difficult for the chemicals division.
"We are managing the business for the current volatile environment. We have a strong balance sheet and are positioned to take advantage of the upturn in the markets in which we operate," de Lange said.
African News Agency (ANA)