Omnia growth plans intact

Johannesburg - Chemical services group Omnia is eyeing South Africa to make acquisitions, but an analysts said the firm's best long-term growth prospects lie elsewhere.

Reporting "poor" interim (to end-September) results on Monday, Omnia managing director Rod Humphris said it will not deter the group from pursuing new growth opportunities in the next six months. "We think there are a lot of opportunities with most of the momentum coming from South Africa," he said.

South Africa contributes 77% to Omnia's turnover. However Frost & Sullivan chemicals analyst Kholofelo Maele said Omnia should rather look elsewhere to pursue growth.

"The local market will remain Omnia's major revenue generator in the short to medium term," she said. "But, it is highly competitive and many sectors are starting to approach maturity."

Recently, Omnia division Protea Chemicals acquired Petroleum Fine products, one of the largest suppliers of petroleum jelly and white minerals oils for use in cosmetic, pharmaceutical and personal care applications.

"The group has made smart acquisitions to increase its strength in the market," Maele said, adding that the group's investments in technology development have become a critical competitive advantage for the group. "The investment into technologically advanced products that provide additional value to end-users will be key drivers of future growth across its multiple divisions," she said.

Humphris said Omnia was close to finalising the feasibility stage of building a second nitric acid plant.

During the period under review, Omnia reported a loss of R99m, against a profit of R373m in the previous corresponding. Revenue declined 22% to R4.2bn.

Impacting the group's financials, Omnia's agriculture division took a R350m stock write-down due to declining prices and fluctuating exchange rates.

By midday Omnia was trading up 1.69% at 6 000c/share on the JSE.

Broker consensus compiled by McGregor BFA has Omnia on a "buy".

- Fin24.com