Sales, costs hit Omnia

Johannesburg - Chemical services group Omnia's interim profit margins have been adversely hit by lower sales and higher input costs, but the group is still eyeing acquisitions in its second half.

"This interim period proved very challenging following a sharp decline in commodity prices in the prior period," said managing director Rod Humphris on Monday. "This was exacerbated by excessively high inventory levels [at Omnia]."

For the six months to end September, Omnia reported a decrease in revenue of 22% to R4.2bn, and an operating loss of R52m, down from a R595m profit a year ago. It also showed a basic loss per share of 218.2 cents, down 74% from 2008.

Although the firm has said it will contain costs in the second half, it remains on the lookout for possible acquisitions. Said Humphris: "The Group is investigating a number of value enhancing growth projects, which include acquisitions as well as direct capital expenditure, especially in the critical areas of alternative energy and water purification."

Omnia's half year figures have dampened the group's full year prospects, especially given what Humphris called an "extraordinary performance in the previous year".

In a note to Fin24.com, David Lerche, an analyst at Avior Research said: "The second half should see the agricultural division return to profitability and the group generate a small profit for the full year."

The firm decided not to declare a half year dividend.

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

- Fin24.com