Omnia Holdings Limited · JSE:OMN
Omnia — FY2016 Earnings Presentation
49 slides from Omnia's earnings presentation, Jul 25, 2016
Slide 1: Results Presentation FY2016
OMNIA HOLDINGS LIMITED CREATING CUSTOMER WEALTH BY LEVERAGING KNOWLEDGE RESULTS PRESENTATION FY2016
Slide 2: Agenda
AGENDA Omnia at a glance Agriculture overview Mining overview Chemicals overview Financial overview Prospects Page 2
Slide 3: Omnia at a Glance
OMNIA AT A GLANCE AGRICULTURE MINING CHEMICALS Omnia’s Agriculture division Omnia’s Mining division services The Chemicals division’s main comprises Omnia Fertilizer and the mining industry through business is through Protea Omnia Specialities BME and Protea Mining Chemicals Chemicals Page 3
Slide 4: Our Vision and Strategy
OUR VISION AND STRATEGY Vision ‘Creating customer wealth by leveraging knowledge’ Strategy • Providing specialised solutions to the agriculture, mining and chemicals markets • Focusing on unique market offerings that create value and, in so doing, earn a premium • Diversifying geographically beyond
Slide 5: Our Value Proposition
OUR VALUE PROPOSITION • We differentiate ourselves from other commodity chemical suppliers by applying our intellectual capital and technologies to all key points along our supply and service chains • This enables Omnia to create value throughout by tailoring our products and services to the specifi
Slide 6: Geographical Scope
GEOGRAPHICAL SCOPE A Agriculture 4 Mining: BME & Mining: Protea Mining Chemicals A Chemicals 1) South Africa (3) East Africa 6 ) Australasia E Burkina Faso 4 Australia aa aun . New Zealand Angola Mali 4 > : arama sieht " Lesotho Senegal a al * Mozambique Sierra Leone a le : Namibia Zimbabwe “Brazil
Slide 7: Key Drivers – FY2016
KEY DRIVERS – FY2016 • Weaker SA rand • Agriculture division • Maintained sales volumes despite drought • Agriculture Trading segment loss in Australia • Lower production volumes impacting overhead recovery • Mining division • Annualised effect of contracts lost in prior year • Price pressures from
Slide 8: Overview of Results
OVERVIEW OF RESULTS 2016 % 2015 Revenue Rbn 16.8 - 16.8 Profit before tax Rm 1 012 (24) 1 331 Profit after tax Rm 702 (25) 934 Basic earning per share cents 1 042 (26) 1 402 Headline earnings per share cents 1 033 (29) 1 465 Total dividend cents 360 (27) 490 Debt: Equity % (3) 12 Ungeared balance sh
Slide 9: Other Key Features
OTHER KEY FEATURES • Revenue remained flat at R16.8 billion • Operating profit down 19% to R1 189 million • Profit after tax of R702 million down 25% • Cash generated from operations increased to R2.3 billion, up R1.3 billion year-on-year • Headline earnings per share down 29% to 1 033 cents per sha
Slide 10: Agriculture Overview
AGRICULTURE OVERVIEW
Slide 11: Agriculture Overview
AGRICULTURE OVERVIEW • Revenue of R8.2 billion up 13% • Record sales of liquid fertilizers despite drought • Volumes down 4% - South Africa 1%, International 3% • Operating profit of R494 million, down 25% year-on-year • Reduced downstream sales of ammonia nitrate to Mining division • Lower producti
Slide 12: Crop Prices – USD per Tonne
CROP PRICES – USD PER TONNE Maize – prices at $ 400 $ 700 31 March – USD 2012 230 $ 350 2013 248 $ 600 2014 176 $ 300 2015 140 $ 500 2016 132 $ 250 Maize and Wheat Wheat – prices at $ 400 31 March – USD Soya $ 200 2012 236 $ 300 2013 246 $ 150 2014 248 $ 200 2015 181 $ 100 2016 165 $ 50 $ 100 Soya -
Slide 13: Maize – Rand per Tonne
MAIZE – RAND PER TONNE Maize – prices at 5500 6 000 31 March – Rand 2013 2,325 5000 2014 2,650 5 000 4500 2015 2,436 2016 3,265 4000 4 000 Maize and Wheat Wheat – prices at 31 March – Rand 3500 Soya 3 000 2013 3,480 3000 2014 3,975 2015 3,883 2500 2 000 2016 4,625 2000 Soya – prices at 1 000 31 Marc
Slide 14: Ammonia vs Urea Price – USD per Tonne
AMMONIA VS UREA PRICE – USD PER TONNE Urea (Gran) – prices at $ 800 31 March – USD 2012 455 $ 700 2013 400 2014 320 $ 600 2015 263 Ammonia and Urea (Gran) 2016 201 $ 500 Ammonia – prices at 31 March – USD $ 400 2012 407 2013 545 $ 300 2014 475 2015 428 $ 200 2016 338 $ 100 $0 Mar 2011 Mar 2012 Mar 2
Slide 15: Phosphate and Potash Prices – USD per Tonne
PHOSPHATE AND POTASH PRICES – USD PER TONNE Phosphate – prices at $ 700 31 March – USD 2012 498 $ 650 2013 513 $ 600 2014 498 2015 473 $ 550 2016 360 $ 500 Phosphate Potash – prices at 31 March – USD $ 450 2012 465 $ 400 2013 405 2014 305 $ 350 2015 308 2016 242 $ 300 $ 250 $ 200 Mar 2011 Mar 2012 M
Slide 16: South Africa Rainfall
SOUTH AFRICA RAINFALL Approximate mm rainfall per year 2009 620 2010 620 2011 660 2012 590 2013 580 2014 570 2015 403 Page 16
Slide 17: South Africa Rainfall: 403 mm in 2015
SOUTH AFRICA RAINFALL: 403 MM IN 2015 Annual total rain <500 mm per annum Year mm 2015 403 1945 437 1992 440 2003 446 13 years when the total rainfall for 1935 451 South Africa was less than 500 mm 1919 451 per annum 1965 452 1926 468 1916 476 1927 488 1912 493 1982 496 1941 496 Page 17
Slide 18: Understanding the El-Niño Phenomena
UNDERSTANDING THE EL-NIÑO PHENOMENA Page 18
Slide 19: RSA – Commercial Maize Production
RSA - COMMERCIAL MAIZE PRODUCTION • El-Niño has a variable effect on crop production – currently dissipating • Start of La-Niña conditions predicted for 2016/2017 16 14 Tonsproduced(millions) 12 10 8 6 4 2 0 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006
Slide 20: Mining Overview
MINING OVERVIEW
Slide 21: Mining Overview
MINING OVERVIEW • Tough market conditions • Continued low commodity market prices • Limited greenfield and brownfield opportunities • Price margin pressures • Volumes down 17% • Two major contract losses in Q4 FY2015 - full effect in FY2016 • Excluding those two contracts - FY2016 volumes down 5% •
Slide 22: Mining Overview
MINING OVERVIEW • BME – Axxis ® • World record blast in Australia - 5 665 electronic delay detonators • New markets – high tech precision blasting in built-up area (Singapore mass rapid transport rail system) • BME – Emulsion application systems • Gaining acceptance in underground markets • Alternat
Slide 23: Precious Metals USD per Ounce
PRECIOUS METALS USD PER OUNCE Gold – prices at $2000 $1000 31 March – USD 2012 1 671 $900 2013 1 595 $1800 $800 2014 1 294 2015 1 200 $1600 $700 2016 1 222 and Gold PlatinumandGold $600 Platinum – prices at $1400 Palladium Palladium 31 March – USD $500 2012 1 640 $1200 Platinum $400 2013 1 571 2014
Slide 24: Energy/Commodity Prices in USD
ENERGY/COMMODITY PRICES IN USD Oil – prices at $ 140 31 March – USD 2012 122 2013 108 $ 120 2014 107 2015 56 $ 100 Oil, Coal and Uranium 2016 40 Coal – prices at $ 80 31 March – USD 2012 105 $ 60 2013 80 2014 72 $ 40 2015 60 2016 51 $ 20 Uranium – prices at 31 March – USD 2012 51 $- Mar 2011 Mar 201
Slide 25: Metal Commodity Prices in USD per Tonne
METAL COMMODITY PRICES IN USD PER TONNE Copper – prices at $12000 $200 31 March – USD 2012 8 480 $180 2013 7 469 $10000 $160 2014 6 730 2015 6 105 $140 $8000 2016 4 754 $120 Iron ore Iron ore – prices at Copper Ironore Copper 31 March – USD $6000 $100 2012 145 $80 2013 140 $4000 2014 112 $60 2015 57
Slide 26: Chemicals Overview
CHEMICALS OVERVIEW » Protea Chemicals
Slide 27: Chemicals Overview
CHEMICALS OVERVIEW • Excellent turnaround of Protea Chemicals • 69% increase in profit year-on-year • Margin increased from 2.4% to 4.2% • Volumes down 5% - rationalised product range • Business restructured • Decentralised to centralised model • Simplification of business model • Reduction in expen
Slide 28: Index of South Africa Manufacturing Volumes
10 8 6 4 2 0 2 4 6 8 Mar2010 May2010 Jul2010 Sep2010 2011 Nov2010 Jan2011 Mar2011 May2011 Jul2011 Sep2011 2012 Nov2011 Jan2012 Mar2012 May2012 Jul2012 Sep2012 2013 Nov2012 Jan2013 Mar2013 May2013 Jul2013 Sep2013 2014 Nov2013 Jan2014 Mar2014 May2014 Jul2014 Sep2014 2015 Nov2014 Jan2015 Mar2015 May201
Slide 29: Chemicals
CHEMICALS • Low international commodity USD prices - especially oil-derived chemical prices • SA rand prices remained flat – weakening of rand/dollar exchange rate offset lower USD prices • Customer centric focus - improvements in product offering and service levels • Improved logistics - rationalis
Slide 30: Financial Overview
FINANCIAL OVERVIEW
Slide 31: Key Drivers of Revenue and Profits
KEY DRIVERS OF REVENUE AND PROFITS • Exchange rates • Weakening SA rand:US dollar • Currency hedge – translation of earnings from foreign operations • Commodity prices and volumes • Lower across all three divisions • Ammonia:urea ratio • Unfavourable throughout the year Page 31
Slide 32: Rand:USD Exchange Rates
RAND:USD EXCHANGES RATES 17 FY2015 Average – R11.12 FY2016 Average – R13.84 16 +9% +24% 15 14 13 Rand 12 11 10 9 8 31 March 2015 – R12.14 +15% 31 March 2016 – R14.72 +21% 7 31 Mar 2014 30 Sep 2014 31 Mar 2015 30 Sep 2015 31 Mar 2016 Page 32
Slide 33: Income Statement
INCOME STATEMENT • Gross profit – Decrease in volumes, lower unit selling price and weakening exchange rate • Distribution expenses – Decreased due to sales volumes resulting in lower distribution expenses • Administrative expenses – Weaker rand: US dollar which affected costs of operations outside
Slide 34: Sales Mix and Volumes – % Change Year-on-Year
SALES MIX AND VOLUMES – % CHANGE YEAR-ON-YEAR Average Revenue Volumes price Agriculture +13 (4) +17 Mining (15) (17) +2 Chemicals (5) (5) - Page 34
Slide 35: Income Statement
INCOME STATEMENT • Finance expense – hedging US$ equity R86 million (2015: R47 million); higher interest rates • Income tax – Section 12l special allowance R16 million (2015: R2 million); losses in international countries not offset against profits elsewhere 2016 % 2015 Revenue Rm 16 774 - 16 835 Co
Slide 36: Segmental Review
SEGMENTAL REVIEW 2016 2015 Revenue (external) Rm 8 218 7 287 Operating profit Rm 494 656 Operating margin % 6.0* 9.0 Total assets Rm 7 167 6 919 Revenue (external) Rm 4 551 5 351 Operating profit Rm 526 720 Operating margin % 11.6 13.5 Total assets Rm 2 842 2 677 Revenue (external) Rm 4 005 4 197 Op
Slide 37: Segmental Performance – Revenue
SEGMENTAL PERFORMANCE – REVENUE • Five year Compound Annual Growth Rate of 12.8% 18 16.77 16.84 16.26 16 4.20 4.00 14 13.43 4.12 12 10.76 3.65 4.55 R billion 10 5.35 3.23 5.46 8 4.38 6 3.05 4 8.22 6.68 7.29 5.40 2 4.48 0 FY2012 FY2013 FY2014 FY2015 FY2016 Agriculture Mining Chemicals Page 37
Slide 38: Segmental Performance – Operating Profit
SEGMENTAL PERFORMANCE – OPERATING PROFIT • Five year Compound Annual Growth Rate of 11.6% 1 600 1 476 1 416 1 400 100 156 1 231 1 189 1 200 53 169 1 000 720 881 R million 82 829 800 735 526 600 476 400 656 443 431 494 200 323 0 FY2012 FY2013 FY2014 FY2015 FY2016 Agriculture Mining Chemicals Page 38
Slide 39: Balance Sheet – Assets
BALANCE SHEET – ASSETS • Non-current assets • Fixed assets • Expansion capital R332 million; replacement capital R95 million • Depreciation R333 million • Intangible assets • Amortisation R40 million • Current assets • Inventories – higher rand unit prices • Trade and other receivables – increased e
Slide 40: Balance Sheet – Debt and Equity
BALANCE SHEET – DEBT AND EQUITY • Net movement in equity of R1 020 million • Profit R702 million; FCTR increase R682 million • Dividends paid R324 million; Treasury shares purchased R51 million • Deferred tax • Increase R63 million - losses and timing differences • Positive net cash • Emphasis on ca
Slide 41: Cash Flow
CASH FLOW 2016 2015 Cash generated from operations Rm 2 304 968 Finance cost – net Rm (203) (161) Taxation paid Rm (245) (341) Net cash flow from operating activities Rm 1 856 466 Net cash flow from investing activities Rm (469) (578) Net cash flow from financing activities Rm (432) (466) Net increa
Slide 42: Debt: Equity Ratio
DEBT: EQUITY RATIO 9 000 25% 8 000 7 662 7662 20% 7 000 19% 66642 642 55912 912 6 000 Debt and equity (Rm) Debt: equity ratio (%) 15% 4 952 5 000 12% 4 028 11% 4 000 10% 3 000 6% 5% 2 000 1 000 772 820 564 335 0% -228 0 -3% -1 000 -5% FY2012 FY2013 FY2014 FY2015 FY2016 Equity Debt Debt:equity ratio
Slide 43: Prospects
PROSPECTS
Slide 44: Group Outlook
GROUP OUTLOOK • SA rand:USD weakness benefits all three divisions • Strong balance sheet • Growth opportunities – continue to identify and evaluate • Turnaround of Protea Chemicals continues building momentum • Upgrading of IT platforms adding value • Strong management team and business model • Cont
Slide 45: Outlook – Agriculture Division
OUTLOOK – AGRICULTURE DIVISION • Drought dissipating - La-Niña conditions developing • Growth opportunities - Cape • Ammonia:urea ratio expected to improve • Expansion of new Nitrophosphate facility • Operational – quadruple capacity • Margin improvement – 1% to 2% margin points • Indicative capital
Slide 46: Outlook – Mining Division
OUTLOOK – MINING DIVISION • Mining sector - expected to remain weak • New copper belt contracts – full year benefit to be realised • Portable emulsion pumping system – ongoing roll-out • Used oil – increased use in emulsions • AXXIS® sales - growth in Australia; potential new opportunities in North
Slide 47: Outlook – Chemicals Division
OUTLOOK – CHEMICALS DIVISION • South African manufacturing sector - remains weak • International commodity prices – expected to rebuild off low base • Footprint - extend product offering to regional African markets • New business model – continued optimisation • IT platforms – further business and o
Slide 48: Operating Margin – %
OPERATING MARGIN – % Target Actual Target FY2016 FY2016 FY2017 Agriculture 7–9 6.0* 7–9 Mining 13 – 15 11.6 12 – 14 Chemicals 3–4 4.2 4–5 *Excluding Agriculture Trading segment result - margin would be 7.5% Page 48
Slide 49: Creating customer wealth by leveraging knowledge
WWW.OMNIA.CO.ZA Creating customer wealth by leveraging knowledge