DURBAN – JSE-listed Omnia Holdings shares rose by more than 15 percent on the JSE yesterday as it announced a plan to stabilise the firm as it restructures debt and despite the diversified chemicals group reporting a loss of R407 million for the year to end March, down from R664m.
Last month the group announced a R2bn rights issue to reduce debt.
Newly appointed financial director Seelan Gobalsamy said, together with their key stakeholder, Omnia was developing a stabilisation plan for the business. “Traditionally Omnia has been a relatively unleveraged business, but now it finds itself with a significant amount of debt during very challenging economic times. This debt has to be unwound responsibly in order to stabilise operations. This will enable the business to realise the returns and benefits that can be extracted from the growth initiatives undertaken in recent years,” Gobalsamy said.
However, the group was confident about its operations going forward. The group had just secured a R6.8bn bridge facility with its major lenders, which would allow it to settle all borrowings and overdraft facilities.
The group said the results were effected by adverse market conditions, coupled with sector-specific and trading challenges across its core operating segments; agriculture, mining and chemicals.
Managing director Adriaan de Lange said the financial year was a particularly challenging one for Omnia as the business had faced a difficult operating environment, which was exacerbated by a number of unfavourable events occurring simultaneously across a business that had historically been relatively defensive in nature.
“Difficulties across our core operating segments were characterised by erratic climatic conditions, such as drought coupled with late rains, exchange rate volatility, economic instability in Zimbabwe, a decline in commodity prices, protracted pressure on the local economy and low business confidence negatively impacting demand,” De Lange said.
The group reported a 98percent decline in operating profit to R24m, down from R1.16billion compared to last year and this resulted in an operating margin of 0.1 percent compared to last year’s 6.7percent.
However, revenue increased by 7percent to R18.63bn, up from R17.37bn compared to last year, positively impacted its acquisitions Oro Agri, which contributed R711m and Umongo Petroleum with a contribution of R1.19bn. The group said excluding the acquisitions, revenue was down by 2percent.
Omnia also reported headline loss a share of 112cents a share compared to last year’s headline earnings per share of 991c.
The group did not declare a dividend at year-end compared to 150c a share declared last year.
The agriculture division reported 35.54percent decline in operating profit to R370m, while the mining division reported a 50.73percent decline in operating profit to R169m.
The chemicals division was the hardest hit as it saw its operating profit declining by 93.87 percent to R10m, driven by margin pressure from the growth strategy previously embarked on, loss-making product lines, restructuring costs and a general slowdown in the sector.
The share price climbed to R39.69 a share yesterday afternoon and closed at R38.39.