Half-year profit of explosives, chemicals and fertiliser group Omnia nearly doubled as it managed to ensure the security of supply to customers amid global fertiliser shortages and heightened demand from mining and agriculture for inputs.
The R11.4bn JSE-listed company on Tuesday reported that excluding the effect of Zimbabwe’s hyperinflationary accounting, group operating profit had jumped 47% to R1.066bn for the six months to end-September. Headline earnings per share increased to 295c from 286c last year.
CEO Seelan Gobalsamy said the group was able to achieve this result by having a flexible supply chain that allowed it to import products from all over the world for its customers.
“There’s a very strong demand for fertiliser and explosives at the moment,” Gobalsamy said. This has been partly driven by the Russia-Ukraine war that has resulted in global shortages.
The recent spate of supply chain disruptions, coupled with Transnet declaring force majeure, left many customers desperate to know whether they would get explosives and fertiliser, Gobalsamy said, with Omnia well positioned to step in to supply the market.
He said the work done over recent years to strengthen Omnia’s balance sheet was paying off. As global and local headwinds hit the group was able to increase its stock position and working capital.
“We’ve invested R2.2bn in working capital and after doing that the company is still in a cash positive position with no debt,” said Gobalsamy, adding that this had allowed the company to increase the stock it holds.
Omnia operates in SA, North America, Australia, Brazil and China, among other places.
The group said operating profit in its agriculture segment had increased 33% to R658m bolstered by its focused strategy to optimise volume-margin mix, which was supported by efficient manufacturing facilities and an agile supply chain.
The mining segment’s operating profit rose 44% to R359m as the group secured multiple contract extensions and new business in both surface and underground mines.
Omnia said higher commodity prices also aided in shoring up the group’s performance. However, this was partially offset by above-inflation input cost increases and lower volumes, which were negatively affected by bad weather, industrial action, regulatory challenges and the intermittent availability of utility services.
Looking ahead, the group said it is gearing up to benefit from the bumper harvest expected in the Southern African Development Community (Sadc) region. It also sees opportunities to expand and grow its AgriBio business globally in areas such as Australia and Brazil.
“We’ll continue to invest in solar, infrastructure, alternative water sources and you might see us increase our distribution in the world,” he said, adding that the group was opening an office in the Netherlands and making further infrastructure investments in the US.
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