Our opinion on the current state of OMNIA(OMN)
Omnia (OMN) is a diversified chemicals company supplying products to the agricultural, chemicals, and mining industries in South Africa and 48 other countries. The Agricultural division is the leader in fertilizers in Southern Africa, supplying granular, liquid, and specialty fertilizers in Southern Africa, Eastern Africa, Australia, New Zealand, and Brazil. The mining division is the leading supplier of explosives in South Africa, Mali, Swaziland, Sierra Leone, Malawi, Senegal, Zambia, Zimbabwe, Botswana, Mozambique, and the DRC. The chemicals division manufactures and distributes specialty, functional, and effect chemicals and polymers operating throughout the African continent.
The company gets most of its sales from agriculture for fertilizers and the mining industry for explosives. In its efforts to diversify away from the South African economy, OMN acquired Oro Agri in America for $100 million and Umongo Petroleum for R780 million. They also commenced the construction of a R630 million nitro phosphate plant at Sasolburg.
Omnia's performance reflects the general performance of the South African economy. It has been very well managed and grows consistently by acquisition and organically, but it operates in very tough markets where it has become difficult to make good profits. It is a relatively risky investment and dependent on commodity prices and agriculture, both of which have done well.
In its results for the year to 31st March 2024, the company reported revenue down 16% and headline earnings per share (HEPS) down 6%. The agriculture division saw turnover down 22%, mining down 3%, and chemicals down 23%. The company said, "Since raising capital of R2.0 billion in FY20, we have settled debt in excess of R4.0 billion, invested R2.8 billion in capex and returned R4.3 billion to shareholders."
Technically, the share has been in a downward trend since its peak in May 2022. We recommend waiting for it to break up through its long-term downward trendline, which may occur fairly soon. Given its strategic moves and financial management, Omnia could present a good investment opportunity once it shows signs of technical recovery. However, potential investors should be aware of the inherent risks associated with its dependency on commodity prices and agricultural performance.
The company gets most of its sales from agriculture for fertilizers and the mining industry for explosives. In its efforts to diversify away from the South African economy, OMN acquired Oro Agri in America for $100 million and Umongo Petroleum for R780 million. They also commenced the construction of a R630 million nitro phosphate plant at Sasolburg.
Omnia's performance reflects the general performance of the South African economy. It has been very well managed and grows consistently by acquisition and organically, but it operates in very tough markets where it has become difficult to make good profits. It is a relatively risky investment and dependent on commodity prices and agriculture, both of which have done well.
In its results for the year to 31st March 2024, the company reported revenue down 16% and headline earnings per share (HEPS) down 6%. The agriculture division saw turnover down 22%, mining down 3%, and chemicals down 23%. The company said, "Since raising capital of R2.0 billion in FY20, we have settled debt in excess of R4.0 billion, invested R2.8 billion in capex and returned R4.3 billion to shareholders."
Technically, the share has been in a downward trend since its peak in May 2022. We recommend waiting for it to break up through its long-term downward trendline, which may occur fairly soon. Given its strategic moves and financial management, Omnia could present a good investment opportunity once it shows signs of technical recovery. However, potential investors should be aware of the inherent risks associated with its dependency on commodity prices and agricultural performance.
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