The company’s adjusted earnings excluded Zimbabwe, and if the basket case north of the Limpopo is removed from the equation, its operating profit rose 47% to just more than R1-billion instead of 18%. Adjusted headline earnings per share were 32% higher at 401 cents. 

“The impact of operations in Zimbabwe has necessitated the introduction of an adjusted earnings measure … Omnia Zimbabwe is subject to the application of IAS 29 Financial Reporting in Hyperinflationary Economies, which results in earnings volatility. 

“In addition, the government of Zimbabwe introduced a change in monetary policy which caused a further notable devaluation in the Zimbabwean dollar, resulting in disproportionate foreign exchange movements (most of which are unrealised) in this period’s results,” Omnia said. 

Omnia CEO Seelan Gobalsamy. (Photo: Supplied)

It’s probably fortunate that Zimbabwe accounts for less than 5% of the group’s revenue, but CEO Seelan Gobalsamy told Business Maverick the company was making money there and planned to continue operating in the country despite the challenges. 

“The hyperinflation accounting has caused a distortion. So, what we have done in this set of results is show how Omnia has performed without Zimbabwe, and how Omnia has performed with all the hyperinflation and forex issues. Those issues all unwind because they are not realised losses or gains. They just all unwind in the next period,” he said.  

“It’s a market that needs our fertiliser and needs our explosives. We have made money in Zimbabwe … we have generated cash in Zimbabwe, and we brought some of that cash back to South Africa … we will stay in that market and see how we can manage ourselves a little bit differently. It is a core market for us going forward,” Gobalsamy said. 

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South Africa poses its own challenges.

“In South Africa, deteriorating utility infrastructure, labour unrest, sociopolitical instability, disruptions to electricity supply and the adverse impact of weather conditions have placed severe pressure on the economy,” Omnia said. So, the usual litany of South African woes. 

Still, Omnia – which derives about 80% of its revenue from the SADC region with offshoots in Australia, Indonesia and elsewhere – managed to boost revenue and profits. 

“The Agriculture segment (excluding Zimbabwe) delivered a 17% increase in net revenue to R5.8-billion, supported by growth in the AgriBio business and elevated commodity prices,” the company said. 

South African farmers bought inputs later than anticipated because of the weather and expectations of falling prices, but the outlook for the southern hemisphere summer crop season looks good, and Omnia should reap further profits as a result.

The company’s mining division also fared well. 

“A supportive commodity price environment enabled the Mining segment to achieve a 32% increase in net revenue to R4.3-billion, and a 44% rise in operating profit to R359-million,” Omnia said. 

This points to resiliency in these sectors – a company like Omnia is kind of a proxy for their performance – and the commodity price outlook remains fairly bullish. 

Omnia does interesting stuff and is a leading provider in the region of “precision farming” services, which enable farmers to precisely measure soil and nutrient content in their fields and then apply the correct inputs through GPS technology to boost yields. 

In markets such as Zambia, this is even being rolled out to small-scale farmers. While not exactly precise, this makes companies such as Omnia a proxy for agricultural performance. DM/BM