A trading statement released in March caught the market by surprise when Omnia directors said a headline loss of R134 million was expected for the year to end-March 2019, from headline earnings of R670m the year before, partly because of higher finance charges to fund debt that was raised to pay for acquisitions and new plant. To provide an indication of how far the share price has fallen, a year ago it was trading at around R147.80.
However, the directors said yesterday that they were in talks with Omnia’s major debt providers and an appropriate debt structure was being assessed. Another trading statement would be released once there was reasonably certainty what impact the debt restructuring might have on the full year and comparative results. The results are expected to be published on or about June 25.
Last year the group acquired international bio-pesticide, nutrients and soil conditioner manufacturer Oro Agri for $100m. In addition, R695m was spent to construct a new nitro-phosphate plant. At the end of September 2018, Omnia’s interest bearing borrowings had shot up to R2.5 billion from R1.07bn at the end of March that year, and only R147m in the comparable interim period the year before.
According to the March statement, a number of once-off costs were also expected to contribute to the weak results including: a R44m impairment of a problematic debtor in Angola; Protea Chemicals spent R35m to restructure its business; while The Emerging Farmers programme, in a year of drought, continued to be under stress.
In addition, subsidiaries Fertilizer Zimbabwe and Acol Chemicals were being impacted by the slowdown in business in that country, while the vesting of the group’s 12-year share B-BBEE scheme Sakhile 1 resulted in a non-cash share based payment cost of R54m. Drought, late rains, currency weakness and restructuring in the local and international mining industry were also expected to have a negative impact.