Farmers and mining companies should stock up early on fertiliser and explosives given the effects of the conflict in Ukraine, supply chain disruptions, high commodity prices and demand, Omnia Holdings CEO Seelan Gobalsamy said yesterday.
Omnia’s operations in South Africa includes the manufacture of ammonia nitrate for fertilisers and explosives, and the group has itself in the year to March 31 boosted inventories in the wake of the uncertain operating environment, so that it remained in a good position to supply customers, Gobalsamy said in an online interview.
Russia and Ukraine were significant role-players in agricultural commodity markets in terms of grains (wheat and maize), oil seeds (soybean, canola and sunflowers) and key agricultural inputs such as nitrogen, phosphates and potassium, which had resulted in supply shortages and increased prices of agricultural inputs, he said.
The group overcame these disruptions, also those brought about by the Covid-19 pandemic, the Suez Canal shipping blockage last year, port and rail disruptions, and electricity and potable water challenges, to declare a sharply higher ordinary dividend of 275 cents, and a special dividend of 500 cents (400 cents).
Despite paying out some R1.4 billion to shareholders in dividends, the group was left ungeared with R2.4bn (R1.83bn) cash at year end, which Gobalsamy said would be used to continue investment for organic growth, including in Canada, Australia and Indonesia, and towards sustainability such as for a water osmosis plant in Sasolburg, other efficiencies in its core operations, as well as acquisitions.
“We have strengthened our financial position, enhanced operating asset performance, improved returns on capital and we are investing for the future,” he said.
He anticipated commodity prices to remain high due to the ongoing Ukraine conflict, with a possible “tapering” near the end of the new financial year.
“In the three years since implementing our strategy to stabilise, fix and grow our business … reflecting on our journey thus far, Omnia has undergone a period of transition, and has successfully executed on its strategy,” he said.
The past year’s results saw “exceptional operating performance supported by disciplined cost and working capital management, a higher commodity price environment and favourable conditions for the agriculture and mining businesses.”
The focus remained to pursue greener technologies, expanding geographically and optimise capital allocation.
Headline earnings from continuing operations increased by 86 percent to 672 cents per share. Revenue increased by 30 percent to R21.44bn. Operating profit from continuing operations increased by 40percent to R1.6bn.