Omnia Holdings Limited · JSE:OMN
Omnia — FY2011 Earnings Presentation
66 slides from Omnia's earnings presentation, March 2011
Slide 1: Omnia Holdings Limited
Omnia Holdings Limited Results presentation for the year ended 31 March 2011 creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 2: Group at a Glance
Group at a Glance Chemicals Mining Agriculture creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 3: Our Vision and Strategy
Our Vision and Strategy VISION Create customer wealth by leveraging knowledge STRATEGY • providing specialised solutions to the chemical, mining and agricultural markets • focusing on unique market offerings that create value and, in so doing, earn a premium • concentrating on growing our internatio
Slide 4: Our Value Proposition
Our Value Proposition creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 5: Key Drivers Affecting Results
Key Drivers Affecting Results • Strong demand for mining and agriculture commodities • Strong rand • Low activity levels SA Manufacturing Sector creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 6: Overview of Results
Overview of Results % 2011 2010 2009 Revenue R 9.4 billion 6 R 8.8 billion R 11.1 billion Profit for year R 451 million 678 R 58 million R 491 million Basic earnings per share 768 cents 560 116 cents 1 057 cents Headline earnings 767 cents 897 77 cents 1 063 cents Total dividend for the year - - - 2
Slide 7: Key Financial Features
Key Financial Features • Profit for year up 678% to R451m • Operating margin up from 3.2% to 7.3%, approaching longer term average • Successful conclusion of R1billion rights offer • Debt : Equity ratio at a strong 10% creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 8: Other Key Highlights
Other Key Highlights • Construction of world class Nitric Acid Complex well advanced – expected completion Q1 2012 • New methodology approved by UN for recognition of CER generated – applies to new Nitric Acid plant – under investigation • Achieved a Level 4 status in terms of the DTI BBBEE Codes of
Slide 9: Nitric Acid Complex
Nitric Acid Complex creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 10: PGAN Plant
PGAN Plant creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 11: Overview - Chemicals
Overview - Chemicals creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 12: Overview - Chemicals
Overview - Chemicals 2011 % 2010 2009 Revenue R 3.6 billion (3) R 3.7 billion R 4.5 billion Operating profit R 64 million (58) R 152 million R 198 million Operating margin 1.8% 4.1% 4.4% Contribution to Group 9% 54% 23% • Modest Manufacturing output growth in South Africa • Maintained volumes creati
Slide 13: Index - Physical Manufacturing Volumes – South Africa
Index - Physical Manufacturing Volumes – South Africa creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 14: Commodity Prices – LLDPE (Polymer)
Commodity Prices – LLDPE (Polymer) 2 000 1 800 1 600 US Dollars per metric ton 1 400 1 200 1 000 800 600 400 31 Mar 06 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10 31 Mar 11 creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 15: Overview - Chemicals
Overview - Chemicals 2011 % 2010 2009 Revenue R 3.6 billion (3) R 3.7 billion R 4.5 billion Operating profit R 64 million (58) R 152 million R 198 million Operating margin 1.8% 4.1% 4.4% Contribution to Group 9% 54% 23% • Modest Manufacturing output growth in South Africa • Maintained volumes • Redu
Slide 16: Overview - Mining
Overview - Mining creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 17: Overview - Mining
Overview - Mining 2011 % 2010 2009 Revenue R 2.1 billion 18 R 1.8 billion R 2.1 billion Operating profit R 311 million 47 R 212 million R 269 million Operating margin 14.9% 11.9% 12.7% Contribution to Group 45% 76% 31% • Global recovery in commodity and mineral markets creating customer wealth by le
Slide 18: Commodity Prices - Energy
Commodity Prices - Energy $ 250 $ 200 $ 150 $ 100 $ 50 $- 31 Mar 06 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10 31 Mar 11 Brent Crude $/barrel Coal $/ton Uranium $/lb creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 19: Commodity Prices - Metals
Commodity Prices - Metals $ 2 500 $ 12 000 $ 10 000 $ 2 000 Gold and Platinum $ 8 000 $ 1 500 Copper $ 6 000 $ 1 000 $ 4 000 $ 500 $ 2 000 $0 $0 31 Mar 06 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10 31 Mar 11 Gold $/oz Platinum $/oz Copper $/ton creating customer wealth by leveraging knowledge www.omnia
Slide 20: Overview - Mining
Overview - Mining 2011 % 2010 2009 Revenue R 2.1 billion 18 R 1.8 billion R 2.1 billion Operating profit R 311 million 47 R 212 million R 269 million Operating margin 14.9% 11.9% 12.7% Contribution to Group 45% 76% 31% • Global recovery in commodity and mineral markets – volumes and prices • Higher
Slide 21: Overview - Agriculture
Overview - Agriculture creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 22: Food Inflation and Food Security
Food Inflation and Food Security creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 23: Population Growth
Population Growth creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 24: World Cereal Production and Utilization
World Cereal Production and Utilization creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 25: Evolution of Maize Use
Evolution of Maize Use creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 26: World Grain Stocks-to-Use Ratio
World Grain Stocks-to-Use Ratio creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 27: Per Capita Protein Consumption in Select Economies
Per Capita Protein Consumption in Select Economies creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 28: The China Factor
The China Factor creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 29: China Population and Income Growth
China Population and Income Growth creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 30: China Food Consumption Trends
China Food Consumption Trends creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 31: China Meat Consumption
China Meat Consumption creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 32: Global Fertilizer Market
Global Fertilizer Market creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 33: World Fertilizer Consumption
World Fertilizer Consumption creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 34: World Fertilizer Operating Rates
World Fertilizer Operating Rates creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 35: Overview - Agriculture
Overview - Agriculture 2011 % 2010 2009 Revenue R 3.7 billion 10 R 3.3 billion R 4.5 billion Operating profit R 312 million 467 R (85) million R 410 million Operating margin 8.5% - 9.2% Contribution to Group 45% (30%) 47% • Higher commodity and crop prices – partially offset by rand strength creatin
Slide 36: Crop Prices
Crop Prices $ 450 $ 700 $ 400 $ 600 $ 350 $ 500 $ 300 Maize and Wheat $ 400 Soybean $ 250 $ 200 $ 300 $ 150 $ 200 $ 100 $ 100 $ 50 $0 $0 31 Mar 06 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10 31 Mar 11 Maize $/ton Wheat $/ton Soybean $/ton creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 37: Ammonia vs Urea Price
Ammonia vs Urea Price $ 1 000 $ 900 $ 800 $ 700 $ 600 $ 500 $ 400 $ 300 $ 200 $ 100 $0 31 Mar 06 31 Mar 07 31 Mar 08 31 Mar 09 31 Mar 10 31 Mar 11 UREA PRILL YUZ AMMONIA Yuz creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 38: Phosphate and Potash Prices
Phosphate and Potash Prices $ 1 400 $ 1 000 $ 900 $ 1 200 $ 800 $ 1 000 $ 700 $ 600 $ 800 MOP DAP $ 500 $ 600 $ 400 $ 400 $ 300 $ 200 $ 200 $ 100 $0 $0 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10 31-Mar-11 DAP US Gulf MOP NW Europe creating customer wealth by leveraging knowledge www.omnia.co.
Slide 39: Overview - Agriculture
Overview - Agriculture 2011 % 2010 2009 Revenue R 3.7 billion 10 R 3.3 billion R 4.5 billion Operating profit R 312 million 467 R (85) million R 410 million Operating margin 8.5% - 9.2% Contribution to Group 45% (30%) 47% • Higher commodity and crop prices – partially offset by rand strength • Highe
Slide 40: Financial Overview
Financial Overview creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 41: Key Drivers of Revenue and Profits
Key Drivers of Revenue and Profits • USD : rand exchange rate – Affects selling prices and material costs – Translation of earnings of foreign operations – Effects translation of US dollar denominated equity • Commodity prices – Affects selling prices and material costs • Volumes • Urea : Ammonia ra
Slide 42: USD : ZAR Exchange Rate – Average and Year End
USD : ZAR Exchange Rate – AVERAGE and YEAR END 11.00 F2009 Average –R8.77 F2010 Average – R7.70 F2011 Average – R7.15 +23% -12% -8% 10.00 SAME AS AVE FOR F2008 9.00 8.00 7.00 6.00 Y/E R 9.48 Y/E R 7.29 Y/E - R 6.75 +17% -23% -7% 5.00 Sep-08 Sep-09 Sep-10 Mar-11 Mar-08 Mar-09 creating customer wealth
Slide 43: Income Statement Features
Income Statement Features Audited Audited Rm 2011 % 2010 Revenue 9 368 6 8 827 No carbon credit revenue – R50 million in F2010 Volumes • Chemicals – flat • Mining – up 12% • Agriculture – up 8% Selling prices – average unit prices • Chemicals – down 4% • Mining – up 6% • Agriculture – up 3% creating
Slide 44: Income Statement Features
I Income Statement St t t Features F t Audited Audited Rm 2011 % 2010 Revenue 9 368 6 8 827 Cost of sales (7 403) - (7 438) Gross profit 1 965 41 1 389 Gross profit 21% 15.7% GP% after R 350m adjustment 21% 19.7% • 2010 includes R43m contribution from CER revenue • Margin compression in Agriculture
Slide 45: Income Statement Features
Income Statement Features Audited Audited Rm 2011 % 2010 Revenue 9 368 6 8 827 Cost of sales (7 403) - (7 438) Gross profit 1 965 41 1 389 Other operating income 85 10 77 Distribution expenses (790) 15 (688) Administrative expenses (532) 3 (517) Other operating expenses (41) 18 O Operating ti profit
Slide 46: Income Statement Features
Income Statement Features Audited Audited Rm 2011 % 2010 Revenue 9 368 6 8 827 Cost of sales (7 403) - (7 438) Gross profit 1 965 41 1 389 Other operating income 85 10 77 Distribution expenses (790) 15 (688) Administrative expenses (532) 3 (517) Other operating expenses (41) 18 Operating profit 687
Slide 47: Finance Cost
Finance Cost Audited Audited Rm 2011 % 2010 Interest paid 119 (36) 185 Net foreign exchange losses on conversion of foreign bank balances 3 (91) 32 122 (44) 217 creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 48: Income Statement – Profit before income tax
Income Statement – Profit before income tax Audited % Audited Rm 2011 2010 Profit before income tax 602 452 109 Abnormal downward valuation of inventory 350 Share based payments 15 42 Carbon Credit profit (43) Insurance claim (44) (32) Profit on transfer of business to Nalco (20) Profit before incom
Slide 49: Income Statement Features
Income Statement Features Audited Audited Rm 2011 % 2010 Revenue 9 368 6 8 827 Cost of sales (7 403) - (7 438) Gross profit 1 965 41 1 389 Other operating income 85 10 77 Distribution expenses (790) 15 (688) Administrative expenses (532) 3 (517) Other operating expenses (41) 18 Operating profit 687
Slide 50: Revenue Growth
Revenue Growth Revenue Rm 12 000 10 000 8 000 6 000 4 000 2 000 0 07 08 09 10 11 Revenue Rm creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 51: Segmental Review
Segmental Review Rm 2011 2010 2009 2008 2007 Chemicals Revenue (external) 3 596 3 714 4 528 3 334 2 624 Operating profit 64 152 198 148 127 Operating margin (target 4.5% to 5.5%) 1.8% 4.1% 4.4% 4.4% 4.8% Total assets 1 903 1 896 1 849 1 905 1 472 Net working capital 252 264 483 141 236 Mining Revenu
Slide 52: Segmental Performance - Revenue
Segmental Performance - Revenue 12 000 10 000 8 000 R millions 6 000 4 000 2 000 0 07 08 09 10 11 Chemicals Mining Agriculture creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 53: Segmental Performance – Operating Profit
Segmental Performance – Operating Profit 1 000 800 600 R millions 400 200 0 07 08 09 10 11 -200 Chemicals Mining Agriculture creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 54: Balance Sheet
B l Balance Sh Sheett Audited Audited Rm 2011 % 2010 Assets Non-current assets 2 561 32 1 944 Current assets 3 210 20 2 680 Inventories 1 488 13 1 315 Trade and other receivables 1 722 26 1 365 5 771 25 4 624 Non-current assets – Capex of R546m on Nitric acid Complex Inventory • higher unit costs •
Slide 55: Balance Sheet
Balance Sheet Audited Audited Rm 2011 % 2010 Total equity 3 339 69 1 971 Deferred tax 130 80 Current liabilities 1 960 (10) 2 169 Trade and other payables 1 953 (10) 2 167 Other 7 2 Net debt 342 (15) 404 Short term (net cash) (462) (9) (508) Short term portion of long term debt 523 384 108 Long term
Slide 56: Consolidated Cash Flow
Consolidated Cash Flow Audited Audited Rm 2011 % 2010 Operating profit before depreciation / amortization / non cash items 820 56 524 (Utilised)/generated by working capital (755) 805 65 1 329 Finance costs - net (80) (173) Taxation paid (94) (111) (Utilised)/generated by operations (109) 1 045 Cash
Slide 57: Consolidated Cash Flow – Working capital analysis
Consolidated Cash Flow – Working capital analysis Rm 2011 2010 2009 2008 REVENUE 9 368 8 827 11 111 7 340 WORKING CAPITAL AT YEAR END Agriculture – Inventory 835 647 1 501 655 Agriculture - Receivables 692 414 471 497 Agriculture - Payables (898) (1 072) (1 351) (665) Agriculture – net working capit
Slide 58: Debt/Equity Ratio
Debt : Equity Ratio 4 000 50% 45% 3 500 40% 3 000 Debt and Equity R millions 35% Debt/Equity Ratio 2 500 30% 2 000 25% 20% 1 500 15% 1 000 10% 500 5% - 0% 06 07 08 09 10 11 Equity Net debt Debt/Equity Ratio creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 59: Prospects
Prospects creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 60: Group Outlook and Chemicals
Group Outlook and Chemicals • Overall Macro environment promising – rand direction crucial • Board to review resumption of dividend in F2012 • Chemicals – Renewed focus on volume growth but macro environment to remain difficult – Global chemical prices improving – Full year benefit of overhead restr
Slide 61: Outlook - Mining
Outlook - Mining • Continued benefit from global increased demand for mining commodities • Potential reduction in China Infrastructure spend could affect demand • Global exploration moving to more costly regions as reserves diminish • Positive outlook for energy commodities such as coal and uranium
Slide 62: Outlook - Agriculture
Outlook - Agriculture • International fertilizer prices on the increase • Agriculture produce prices moving up • Opportunities from changing market dynamics • Carbon credit revenue – 2 years revenue creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 63: Thank you
Thank you creating customer wealth by leveraging knowledge www.omnia.co.za
Slide 64: 5 Year Financial Review
5 Year Financial Review 2011 2010 2009 2008 2007 Rm Rm Rm Rm Rm Revenue 9 368 8 827 11 111 7 340 5 537 Operating profit 687 279 877 584 422 Finance costs, net (83) (173) (164) (112) (58) Income from associates* (2) 3 5 – – Profit before taxation 602 109 718 472 364 Taxation (151) (51) (227) (159) (1
Slide 65: Tax Rate Reconciliation
Tax Rate Reconciliation Audited Audited Rm 2011 2010 Tax calculated at 28% (2010: 28%) 169 31 Adjusted for: Secondary taxation on companies - 4 Permanent differences – Share-based payments 4 11 – Prior-year adjustment 1 12 Change in tax rate - (1) Different tax rates in countries in which the Group
Slide 66: Consolidated Cash Flow – Non-cash items
Consolidated Cash Flow – Non-cash items Rm 2011 2010 (Profit)/loss on disposal of property, plant and equipment (4) 1 Assets impaired (3) - Increase in share-based payment expense 15 49 Foreign currency movements (34) 15 Other non-cash items 4 38 (22) 103 creating customer wealth by leveraging knowl