Omnia tanks on news of Rainbow claim
--------------------------------------------------------------------------------
E-Mail article Print-Friendly
Related Links
Classic Business Day Transcript: Omnia earnings up 20%
$\Siseko Njobeni
Trade and Industry Correspondent
NEWS of a claim by Rainbow Chicken could be the cause for yesterdayÆs free fall in specialist chemical services group OmniaÆs share price, barely hours after the group announced good results for the year to March, an analyst said yesterday.
By the afternoon, the companyÆs share price had lost 7,49% on the JSE Securities Exchange.
Responding to a question at the companyÆs results presentation yesterday, MD Rod Humphris said Omnia had received a claim ôin recent daysö from Rainbow Chicken to whom it is a supplier.
Humphris declined to comment further, saying the issue was in the hands of the companyÆs insurance company.
The analyst said the market might have taken a dim view of the news. ôHis comment was vague, something that I understand from a legal point of view. But the market wants certainty,ö he said.
Rainbow Chicken had not responded to Business Day inquiries by last night.
Meanwhile, Omnia increased the contributions to operating profit of its chemicals and mine businesses in the year ended March 31.
The strength in these businesses cushions Omnia from the adverse effects of the negative conditions in the agricultural sector.
Chemicals business accounted for 34% of the groupÆs income, up from last yearÆs 19%. Mining increased its share from last yearÆs 19% to 28%. AgricultureÆs share decreased from 61% to 39%.
Humphris said Omnia was happy with the increases in the contributions of chemicals and mining, saying that it would bring balance and diversity.
ôThe diversity will reduce our risk profile in any of the three businesses,ö he said.
While fertilizer volumes were likely to shrink in the current financial year, the group expected the chemicals and mining businesses to grow, Humphris said.
Because of low maize prices, farmers were likely to plant 15%-20% less crop than last year.
However, the weakening rand was good for agriculture as exports to countries experiencing shortages in maize would rise. Increased wheat and sunflower planting were encouraging, he said.
Omnia increased revenue 30%. This included contributions from Prochem, the chemicals distributor the group bought in 2003.
Net profit increased 33% and basic earnings a share 26%. The company increased its dividend by 15% to 138c a share.
Humphris said the chemicals environment in SA was improving. The local manufacturing industry stood to benefit from lower exchange rates and the low interest rate environment.
He said the chemicals business would also benefit from the buoyant markets in mining, the coatings industry, the rubber and petroleum industries and cosmetics. Mining conditions remained positive because of a commodity price boom. In addition to that, EskomÆs plans to de-mothball power stations ôwill be good newsö, he said.
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
