South African chemicals maker Omnia Holdings will look at acquisitions and new African markets as it seeks to revive growth hit by a manufacturing slowdown, it said on Tuesday.
Full-year group profit dropped 7%, with headline earnings per share (EPS), the main profit measure in South Africa that strips out certain one-off items, down to R8.81 ($0.68) for the year ended March 31.
The results sent Omnia’s shares tumbling nearly 9% on the Johannesburg Stock Exchange to R132 by 1103 GMT.
Omnia, which has divisions in agriculture, mining and chemicals, has suffered a slump in chemicals sales volumes as South Africa’s economy slid into recession for the first time since 2009 and its manufacturing and mining sectors contracted.
That has prompted it to look for new growth areas to boost its chemicals division.
The company said it will look at markets outside South Africa and further acquisitions to strengthen its chemicals business, which has a distribution market throughout South Africa, southern and East Africa.
“We primarily are interested in African markets and it’s an area we have basically under-penetrated from a chemicals perspective,” said Rod Humphris, who stepped down from being Group managing director to chairman at the start of June.
Omnia, which has already acquired a 90% stake in South Africa’s unlisted Umongo Petroleum for R780 million as part of its strategy to expand its chemical business, will continue to look for further acquisitions in its chemicals business, he told Reuters.
“We are certainly looking for more acquisitions. We have not yet exhausted the capacity of our balance sheet.”
“We are looking at anything that will strengthen our existing business as for example Umongo does for our chemicals business,” he said.
Omnia had R90 million of net cash at year-end and no debt.
Humphris said the company could look at “perhaps even adding a fourth leg to our business.”
But he said any new activity would have to be in the chemicals sector “whether that be chemical products or chemical services because that is the golden thread that runs right through our business.”
Revenue in Omnia’s chemical business fell 7% to R3.7 billion as volumes sold fell by 8% due to the subdued manufacturing sector and drought affecting the animal feeds sector, the company said in a statement.
The mining unit saw revenue fall 4% to R4.4 billion while revenue in the agriculture division remained relatively flat at R8.2 billion.