Our opinion on the current state of 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 a 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 across the African continent.
The company derives most of its revenue from agriculture (fertilizers) and mining (explosives). In its efforts to diversify away from the South African economy, Omnia acquired Oro Agri in America for $100m and Umongo Petroleum for R780m. Additionally, they commenced constructing a R630m nitro phosphate plant in Sasolburg.
Omnia's performance is closely linked to the general performance of the South African economy. The company is well-managed and grows consistently through acquisitions and organically, although it operates in challenging markets, making it difficult to sustain high profit margins. It remains a relatively risky investment due to its dependence on commodity prices and the agricultural sector, though both have recently performed well.
In its results for the six months to 30th September 2024, the company reported revenue up 5% and headline earnings per share (HEPS) up 2%. The company said, "Operating profit grew by 17%, supported by enhanced operational efficiency and improved margins. This performance highlights the success of our diversification strategy and the strength of both the Mining and Agriculture businesses."
Technically, the share has been in a downward trend since its peak in May 2022. We recommended waiting for it to break up through its long-term downward trendline, which occurred on 18th June 2024 at 6087c. The share has since moved up to 6579c.
