Omnia to cut 125 jobs in chemicals division
The company plans to restructure the division as poor conditions in manufacturing shrink demand
Omnia, a provider of specialised chemical products and services used in the mining, agriculture and chemicals sectors, would cut 125 jobs, or 15% of the jobs in its chemicals business in a bid to counter difficulties in SA's manufacturing sector, says MD Adriaan de Lange.
The looming restructuring and job losses at Omnia’s Protea Chemicals bear testimony to the effects of a constrained manufacturing sector which, in Omnia’s case, resulted in reduced production volumes and demand. Omnia’s chemicals business Protea Chemicals buys and sells chemicals.
“The issue is that we are not able to add a lot of value. We just distribute chemicals in a very competitive environment and in a market that does not grow. We are now trying to reposition the business and to focus on creating commercial solutions by focusing on the distribution channels and safe handling of chemicals,” De Lange said.
He was speaking after the group’s presentation of results for the six months to September 30, when sales fell 4% at Omnia’s chemicals division, made up of Protea Chemicals and recently acquired Umongo Petroleum.
Omnia’s chemicals division contributed R2.6bn to the group revenue of R8.7bn. The mining and agricultural divisions accounted for R2.5bn and R4.3bn of the total respectively.
Omnia said on Tuesday it had opted to restructure Protea Chemicals because the “slowdown of the business relative to the current overhead structure was not sustainable”.
The company said economic conditions and intense competition affected Protea Chemicals negatively and margins deteriorated to the point where its business model and growth strategy was inappropriate.
Presenting the results, De Lange singled out volatile exchange rates, low international prices, increased competition, a late planting season and financial pressure on farmers among negative factors in the first half.
“Farmers are under financial pressure. We can see that. A lot of people say it is due to land reform. Farming is going through a negative cycle at the moment. There is oversupply of land. This has caused prices of land to drop,” he said. He also cited uncertainty about the Mining Charter. “Uncertainty is never a good thing. I trust that government understands this,” said De Lange.
The company would seek growth internationally, he said. “For us to remain sustainable as a business we need to be exposed to different markets. At the moment, our international expansion strategy is new and off a low base. But it is the right strategy.”
In a move earlier this year that expanded its global reach, Omnia bought US-based Oro Agri, manufacturer of agricultural adjuvants, pesticides and foliar nutrients for agricultural, greenhouse, nursery and turf applications, for $100m.
The interim dividend of 75c was 62.5% down on the R2 paid in the matching period last year.