Surging agriculture, mining demand bolsters Omnia outlook
By: Matthew Hill Published: 20 Jun 07 - 15:24
South Africa’s biggest fertiliser manufacturer Omnia said on Wednesday that it expected demand for the fertiliser, mining explosives and chemicals that it supplied to grow exponentially, as the world’s grain stocks were the lowest in decades, and companies scrambled for minerals in the region, especially uranium.
Demand for grain from the US’s “huge” biofuels drive and low local inventories of agricultural products meant that South African farmers were realising that they “had better get into production”, the JSE listed firm said in a Johannesburg presentation of its results for the year ended March 31.
“It’s a good position to be in for farmers,” MD Rod Humphris said.
He also said that investment trends in Sub-Saharan Africa’s uranium resources were causing an increased demand for the chemicals that Omnia supplied.
“The uranium industry uses a huge amount of our chemicals,” Humphris stated.
The group was now bedding down its focus on improving operational efficiencies and margins to take full advantage of opportunities presented by the growth in demand.
The value of Omnia’s noncurrent assets had increased by 18% year-on-year, to R736-million, as a result of several number of projects it was engaged in to this end.
This included building a shocktube explosives assembly plant that it expected to complete by the end of 2007.
Humphris declined to provide details on the plant’s cost or planned capacity, but did say that Omnia had lost out on a contract because of it did not have shocktube assembly capacity at the time.
Meanwhile, the firm was also looking to improve its operating margin by “another percent or so”, to around 8,5% in the 2007 fiscal year, Humphis said in an interview with Engineering News Online after the presentation.
Its margin for the 2006 financial year was 7,6%.
The improved margins would mainly be generated from its mining division, which had shown a “pedestrian” performance in the year under review.
This would be brought about by the new shocktube assembly plant, as well as renegotiated transport contracts.
