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Tapiwanashe Mangwiro-Senior Business Reporter

Diversified agro-products supplier and miner Omnia Zimbabwe says it had a good trading period despite reduced sales during the year due to a number of factors that negatively impacted operations.

Omnia Zimbabwe’s 2021 net revenue increased by 20 percent to R584 million from R485 million in the same period in 2020.

However, sales volumes dropped after the company took a deliberate decision to limit its exposure to currency and foreign exchange volatility given liquidity challenges facing the country.

The company said the operating profit for the year increased by 213 percent to R364 million in the year under review from R116 million in the same period a year earlier.

Omnia said hyperinflation remained an issue in Zimbabwe, with seasonal fluctuations in inventory, creditors and debtors impacting the monetary gain on hyperinflation. A net impact of hyperinflation on foreign exchange losses of R41 million was recognised in the financial year.

“Hyperinflation, foreign exchange shortages and the impact of Covid-19 on economic activity meant that trading conditions remained constrained in Zimbabwe,” the fertilizer company said.

Going forward the company expects increased demand for its products especially on the African continent due to various Government subsidized programmes in order to leave households food secure.

The fertiliser marketing company said African Governments were increasing support for smallholder farmers amid fears that input costs, driven higher after the Russia – Ukraine war, could cut crop production and worsen food insecurity.

Omnia supplies fertilisers to both commercial and smallholder farmers in several sub-Saharan African countries, including South Africa, Zimbabwe, Zambia, Mozambique, Kenya and Tanzania.

The conflict between Russia and Ukraine, major fertiliser exporters, has accelerated price increases first triggered by Covid-19-induced supply chain disruptions. According to Omnia, prices of fertiliser input materials have gone up by between 200 percent and 400 percent since January 2021.

At group level, Omnia reported R21,437 billion revenues in the full year to March 31, 2022, a 30 percent increase compared to the same period last year, driven by higher commodity prices and sales.

Omnia’s business includes chemical products used in mining, as well as fertilisers. Both the group’s agriculture and mining divisions benefited from a higher commodity price environment.

“These results reflect the ongoing disciplined execution of our strategy in an increasingly complex and uncertain trading environment. Our teams performed well and focused on customer needs whilst leveraging the strength of our integrated supply chain and manufacturing capabilities,” chief executive Seelan Gobalsamy said.

In the year under review, Omnia Holdings, a South African entity, divested from Umongo Petroleum for a cash consideration of R1-billion, which, together with improved operating cash generation across the group, resulted in a cash position of R2,4 billion at the end of the period.

However, strong cash generation was slightly offset by net working capital from continuing operations, which increased by 18 percent to R3,3 billion in the reporting year.

The company continues to manage its working capital cycle and introduce supply chain finance.

The board declared a total shareholder distribution of R1,4 billion, comprising an ordinary dividend of R275c apiece and a special dividend of R525c apiece.