Omnia R1.4bn nitric acid complex on track

Posted On Tuesday, 28 June 2011 02:00 Published by eProp Commercial Property News
Rate this item
(0 votes)

Omnia Holdings said that the construction of its R1.4b Nitric Acid Complex in Sasolburg was well advanced, on budget, and expected completion in 2012.

Rod HumphrisSpecialist chemical services provider Omnia Holdings said on Tuesday that the construction of its R1.4 billion Nitric Acid Complex in Sasolburg was well advanced, on budget, and on track for an expected completion in second quarter of 2012.

The group reported diluted headline earnings per share of 765.1 cents for the year ended March 2011 from 76.7 cents a year ago.

Operating profit was up 146% to R687 million and profit for the year was 678% higher at R451 million.

Shares in the group however, declined amid the absence of a dividend declaration. By 12:39, shares in Omnia had declined R1.27 or 1.7% to R73.25 on the JSE.

"The Board is of the opinion that it would be prudent to preserve capital and utilise this to fund the large capital expansions currently in progress. The Board will review the resumption of a dividend for the 2012 financial year," Omnia said.

Group revenue rose 6% to R9.368 billion on the back of volume increases in the Mining and Agriculture division and overall commodity price increases, partially offset by rand strength.

Gross profit increased 41% to R1.965 billion and rose to 21% of revenue due to improved gross margins in the Mining division and the avoidance of a repeat of the previous year's R350 million abnormal downward valuation of inventory in the Agriculture division.

MD Rod Humphris pointed to "fantastic demand for both mining and agriculture, which was to some extent impacted by a stronger rand".

Humphris said the construction of the Nitric Acid Complex would enable Omnia to meet further increased demand in both mining explosives and fertilizers. The plant would produce 1,000 tons of nitric acid per day, which equated to 140% of the existing plant's capacity.

The plant was estimated to operate at 60% capacity level on startup. Ramp-up to full capacity would take place in line with growth in the explosives and fertilizer markets.

Humphris alluded to the group's rights offer of R1 billion which closed in September, attracting subscriptions totalling R2.02 billion - an oversubscription of 102%.

"We look forward to the completion of the R1.4 billion Nitric Acid Complex which has put Omnia on a growth path and will make a significant difference in the future," he said.

"The company is well positioned in these difficult financial times," Humphris added.

Looking ahead, Humphris said that the macro environment for the next financial year appeared promising. Interest rates were expected to remain at current levels for the next financial year while inflation was expected to start rising, affecting overheads.

The Chemical division was expecting to improve its performance in the year ahead due to a renewed focus on growing revenue through volume growth and an expected increase in local manufacturing activity. The division would also benefit from the overhead restructuring undertaken in financial 2011, which would continue into 2012.

The Mining division should continue to benefit from the buoyant global demand for mining commodities with further volume growth anticipated across the division's entire product range, Omnia said.

Humphris noted that the Agriculture division expected favourable conditions as agriculture product price rises would probably lead to increased plantings. This combined with rising commodity prices and the improved market dynamics in the fertilizer supply landscape in southern Africa boded well for the next financial year.

The MD said that the direction of the rand would be crucial. "The rand is at strong levels, and I am not sure if we will see it stronger," he said.

"Our geographic diversity, global presence and balanced business created by the Group's diversified business model will ensure that the Group remains strategically positioned to benefit from the buoyant market conditions," he concluded.

Last modified on Monday, 18 November 2013 12:05

Please publish modules in offcanvas position.