Chemicals group Omnia managed to grow interim revenue 3% to R7.9bn in the six months to end-September.
But a 36% dive in fertilizer operating profit blamed on a breakdown at one of its nitric acid plants resulted in its aftertax profit falling 22% to R258m.
Omnia reduced its interim dividend to R1.60 from the matching period’s R1.80, it said in its results statement on Tuesday morning.
The group’s biggest sales earner is fertilizer and other agricultural chemicals, contributing 45% of its total revenue. But its biggest profit generator is explosives and other mining chemicals, contributing 61% of its total R457m operating profit.
Omnia managed to grow its agricultural division’s revenue 3% to R3.6bn and its mining division’s revenue 9% to R2.5bn, but both their operating profits declined.
Its third division, chemicals, was an anomaly in that its revenue declined 6% to R1.9bn but its operating profit grew 4% to R74m.
Omnia CEO Rod Humphris speaks to us about first-half earnings, which show a 25% decline in headline earnings per share due to the drought and volatility in the oil price and the rand.
This division includes Protea Chemicals, which sells water treatment products to municipalities. Omnia said this division’s revenue declined on lower volumes sold, but it improved profit thanks to higher prices and tighter overhead costs.
The group said the sharp drop in its agricultural division’s profit followed "the 86-day breakdown at Nitric Acid 2 complex and the additional stock losses in Australia".
Its mining division continued to weather strong challenges in the commodity sector.
Its chemicals division faced stagnant growth while movements in the oil price and exchange rates compounded pricing volatility, the results statement said.
"Going forward, all divisions are well placed to deliver an improved performance in the second half. The agriculture division will move into the traditional summer planting season with the drought having receded, better rains forecast for the next few months and increased throughput and overhead recovery anticipated at the Sasolburg factory," Omnia MD Rod Humphris said in the results statement.
"The mining division continues to improve its product performance and service levels, which assists current and new clients in achieving higher levels of operational performance using the various products, and bedding down of the new business model for the chemicals division presents some interesting opportunities."