Omnia Holdings Limited · JSE:OMN
Omnia — H1 FY2009 Earnings Presentation
43 slides from Omnia's earnings presentation, September 2008
Slide 1: Analyst Presentation for six months to September 2008
Analyst Presentation for six months to September 2008 creating customer wealth by leveraging knowledge
Slide 2: Group at a Glance
Group at a Glance GROUP KEY FACTS Revenue of Employees Customers Countries R5,5 billion 2 388 + 8 000 16 (6 Months) OMNIA GROUP (PTY) LTD CHEMICALS MINING AGRICULTURE www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 3: Overview of Results
Overview of Results Revenue 78% to R 5.5 billion Operating profit 209% to R 594 million Headline earnings per share 281% to 839 cents Interim dividend declared 20% to 100c per share www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 4: The Omnia Proposition
The Omnia Proposition • Leverage intellectual capital and technology to create customer value • Innovate with differentiated products and services • Develop offerings further up the pyramid to broaden value add • Continued commitment to sustainable business practices and Responsible Care www.omnia.c
Slide 5: Operating Environment
Operating Environment • Positive macro environment for Omnia • Strong demand in all three of Group’s major markets • Extraordinary market conditions • Demand for coal, copper, uranium remained robust • Unprecedented oil and gas pricing • Dramatic increase in key input costs • Dramatic changes within
Slide 6: Monthly Sales Profile
Monthly Sales Profile The seasonal nature of agriculture typically impacts the balance sheet at the interim stage APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 7: Operational Highlights
Operational Highlights • Chemicals • Unprecedented demand drove both commodity and speciality chemical prices upwards • Weaker rand boosted revenue • Mining • Continued volume growth in mining chemicals, explosives and related products and services • Demand for coal, copper, uranium remained robust
Slide 8: Chemicals Division
Chemicals Division 2008 % 2007 Revenue R 2.3 billion 52% R 1.5 billion Operating profit R 156 million 160% R 60 million Operating margin 6.9% 4.0% Contribution to Group 26% 31% • Revenue increase due to traditional volume growth, rising international chemical prices, and weaker rand • Renewed focus
Slide 9: Polymer Price Trends - LLDPE
USD 1 000 1 200 1 400 1 600 1 800 2 000 200 400 600 800 Jan-99 www.omnia.co.za Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Polymer Price Trends - LLDPE Dec-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07 Aug-07 Nov-07 Feb-08 May-08 creating customer wealth
Slide 10: Mining Division
Mining Division 2008 % 2007 Revenue R 1 billion 73% R 581 million Operating profit R 126 million 125% R 56 million Operating margin 12.5% 9.7% Contribution to Group 21% 29% • Robust demand for mining chemicals • Recovery in margin as anticipated • Rapidly increasing international prices, particularl
Slide 11: Agriculture Division
Agriculture Division 2008 % 2007 Revenue R2.2 billion 122% R 971 million Operating profit R 312 million 311% R 76 million Operating margin 14.4% 7.8% Contribution to Group 53% 40% • Sales that traditionally occur during second half shifted to the period under review, increasing margins • Strong perf
Slide 12: What Drove High Raw Material Prices?
What Drove High Raw Material Prices? Global High crop Biofuels Chinese Fertilizer food prices Export Tax demand shortages has outstripped supply www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 13: What factors have changed?
What factors have changed? Global Global Crop Biofuels Chinese Fertilizer credit food prices are under Export Tax demand crunch shortages plummeted pressure has been with credit with the affected by crisis drop in looming energy recession prices & food shortages www.omnia.co.za creating customer wea
Slide 14: The Harsh Reality
The Harsh Reality Urea Phos Sulphur MOP Ammonia DAP fob R/$ Gran Ratio Rock fob fob NW fob Yuz Tampa Vancouver Europe fob ME cfr India Average 7.11 326 337 1 557 162 222 265 F2007 Average YTD 8.17 615 624 1.06 1122 397 602 745 F2008 Peak 11.02 885 826 2.4 1200 490 815 893 F2009 Current 10.27 280 278
Slide 15: Raw Material Fundamentals
US $ 100 200 300 400 500 600 700 800 900 1 000 Jan 2005 www.omnia.co.za Mar 2005 May 2005 Jul 2005 Sep 2005 Nov 2005 Jan 2006 Mar 2006 May 2006 Jul 2006 NH3 FOB Sep 2006 Raw Material Fundamentals Nov 2006 International cost per ton ammonia vs urea Jan 2007 Mar 2007 Urea FOB May 2007 Jul 2007 Sep 200
Slide 16: Raw Material Fundamentals
Raw Material Fundamentals International cost per Kg Nitrogen ammonia vs Kg Nitrogen urea CENTS 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Jul-08 Jul-06 Jul-07 Jul-05 Oct-06 Oct-07 Oct-05 Jan-07 Jan-05 Jan-06 Jan-08 Apr-08 Apr-06 Apr-07 Apr-05 NH3/kg N Urea/kg N www.omnia.co.za creating c
Slide 17: Raw Material Fundamentals
Raw Material Fundamentals Rising raw material prices – DAP & MOP 1 400 1 200 1 000 800 USD 600 400 200 Jul 08 Jul 07 Jul 06 Nov 08 Nov 07 Nov 06 Jul 05 Nov 05 Jan 07 May 07 May 06 Jan 08 May 08 Jan 06 Jan 05 May 05 Mar 07 Mar 08 Mar 06 Mar 05 Sep 08 Sep 07 Sep 06 Sep 05 DAP fob USG MOP fob NW Europe
Slide 18: Arable Land Per Capita
Arable Land Per Capita Source: FAO, PotashCorp www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 19: Ethanol Production and Trade Projections
Ethanol Production and Trade Projections Production (million gallons) 2006 2011 2016 United States 4,856 13,950 22,250 Brazil 4,763 5,922 7,524 EU-25 864 1,157 1,458 China 1,083 1,146 1,214 India 486 520 569 www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 20: Accelerating Growth in World Total Grain Consumption
Accelerating Growth in World Total Grain Consumption + 25% Source: USDA, PIRA, PotashCorp www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 21: World Grain Stocks
World Grain Stocks Source: USDA, July 2008 www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 22: Corn Price vs N,P & K prices
Corn Price vs N,P & K prices www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 23: Significant Room for Improvement in Corn Yields
Significant Room for Improvement in Corn Yields Source: IFA, USDA, PotashCorp www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 24: Financial Review
Financial Review
Slide 25: Income Statement
Income Statement 6 Months 6 Months Full year Sept Sept Mar R million 2008 2007 2008 SALES 5,454 78% 3,061 7,340 Operating expenses 493 38% 356 915 OPERATING PROFIT 594 209% 192 584 Finance costs (61) (45) (112) - Interest paid (65) 48% (44) (143) - Interest received 2 1 25 - Forex gain/(loss) 2 (2)
Slide 26: Strong Performance from all Divisions
Strong Performance from all Divisions Chemicals Mining 160 160 120 120 80 80 40 40 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Agriculture First Half 320 280 Second Half 240 200 160 120 80 40 0 2005 2006 2007 2008 2009 www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 27: Operating Profit History - Consolidated
Operating Profit History - Consolidated 600 500 400 300 200 100 0 2005 2006 2007 2008 2009 1st half 2nd half www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 28: Balance Sheet
Balance Sheet Sept Sept Mar R million 2008 2007 2008 CAPITAL AND RESERVES Stated capital 191 186 188 Non-distributable reserves 78 (13) 82 Share-based payment reserve 63 31 45 Retained earnings 1,585 1,085 1,268 Minority interest (2) 2 (2) Shareholders' equity 1,915 1,291 1,581 Closing R/$ exchange
Slide 29: Balance Sheet
Balance Sheet Sept Sept Mar R million 2008 2007 2008 PROPERTY, PLANT AND EQUIPMENT 1,025* 819 965 INTANGIBLE ASSETS 507 429 517 NET WORKING CAPITAL 2,064 1,345 695 Inventories 2,855 1,446 1,380 Trade and other receivables 1,937 1,373 1,457 Trade and other payables 2,728 1,474 2,142 Taxation 69 31 79
Slide 30: Working Capital at the Interim Stage
Working Capital at the Interim Stage 2 500 2 000 1 500 1 000 500 2003 2004 2005 2006 2007 2008 www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 31: Debt : Equity at the Interim Stage
Debt : Equity at the Interim Stage 2 500 100 90 2 000 80 70 1 500 60 50 % 1 000 40 30 500 20 10 0 2002 2003 2004 2005 2006 2007 2008 Debt Equity Debt:Equity ratio www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 32: Cash Flow Statement
Cash Flow Statement 6 Months 6 Months Full year Sept Sept Mar R million 2008 2007 2008 Operating profit 594 192 584 Depreciation and amortisation 54 38 92 Finance cost (63) (43) (118) Taxation paid (167) (61) (134) Utilised by working capital (1,369) (889) (138) Non-cash items (17) (31) 11 (968) (79
Slide 33: Salient Financial Features
Salient Financial Features Sept Sept Mar 2008 2007 2008 Basic earnings per share (cents) 839.04 281% 220.30 718.20 Fully diluted basic earnings per share (cents)* 804.98 269% 218.30 687.90 Final dividend paid per share (cents) in respect of prior year 117 90 90 Interim dividend declared per share (c
Slide 34: Prospects
Prospects
Slide 35: Current Environment
Current Environment • Mining and Agriculture are the fundamental industries in Africa • Omnia well positioned in these markets • Investments in African agricultural land to secure food for the Middle East • Omnia has a diverse customer base: • Industrial • Mining • Fertilizer • The global food short
Slide 36: General Outlook
General Outlook • Weakening rand will benefit our customers and Omnia • Frost & Sullivan – positive outlook for SA chemical industry • Momentum in mining division, supplemented by strong demand for energy products, will drive sales • Agriculture fundamentals are strong • Recent drop in raw material
Slide 37: Chemicals : Divisional Outlook
Chemicals : Divisional Outlook • Infrastructure spend to support demand for Group’s chemical products • Weaker rand will buffer drop in international chemical prices • Natural gypsum shortage will increase EcoGypsumTM volumes • Zetachem will make a full year contribution to divisional results as at
Slide 38: Mining : Divisional Outlook
Mining : Divisional Outlook • Coal and uranium demand remains strong • Mining chemicals set to benefit from increased uranium and copper mining • Increasing opportunities arising from growing presence in Africa www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 39: Agriculture : Divisional Outlook
Agriculture : Divisional Outlook • The landscape has fundamentally changed • World food shortages continue • Sudden decrease in raw material prices, coupled with reduced volumes, will place fertilizer operating margins under pressure • Omnia Fertilizer to benefit from reduction in raw material cost
Slide 40: EnviNox Clean Air Plant
EnviNoxTM Clean Air Plant • Omnia Fertilizer expecting first delivery of CER’s end November • Will result in R 30 million for the current year • Going forward, on track to deliver R 60 million annually www.omnia.co.za creating customer wealth by leveraging knowledge
Slide 41: Long Term Group Outlook
Long Term Group Outlook • Macro environment in mining and agriculture expected to be positive for the next decade • New business process system, QAD, which will improve business information, logistics and productivity • Carbon credits will add at least R 60 million to income per year, from next year
Slide 42: Group Management Target
Group Management Target • Overall compound growth in revenue 14% in real terms over 10 years • Target set by shareholders at 10% real growth in earnings - R 1.237 bn for the 5 years • Management on track to achieve 5 year cumulative earnings target • Successive 3rd five year target achieved • Ranked
Slide 43: Thank You
Thank You creating customer wealth by leveraging knowledge