Omnia’s turnaround plan brings expected profitability
DURBAN – Omnia Holdings' share price surged by more than 34 percent on the JSE yesterday after the diversified chemicals group said it expected to return to profitability in the year to end March thanks to its turnaround plan implemented last year.
The group supplies chemicals and specialised services and solutions for the agriculture, mining and chemical application industries.
The group said it foresaw its earnings per share (Eps) would increase by between 112 and 125 percent, to be between 65 cents a share and 130c compared to a restated loss of 530c reported last year.
Its headline earnings per share (Heps) was expected to increase by between 282 and 302 percent, to be between 177c and 196c compared to a restated headline loss of 97c reported last year.
“Omnia continues to implement its turnaround plan and restructuring processes. During the 2020 financial year, this plan focused on creating a sustainable platform for growth while addressing cost reduction, effectively managing working capital and ensuring a return on capital previously invested,” the group said in a trading statement.
Its prudent cash management strategy and disciplined execution had strengthened its balance sheet and resulted in strong earnings growth.
However, Omnia warned that its full-year results might be hit further by adjustments resulting from the year-end closure process including new Covid-19 related implications, which might result in a change in the estimated Eps and Heps, and stated that a further trading statement will be provided if necessary.
The emergence of the Covid-19 pandemic had resulted in revised economic and industry forecasts accounting for the impact on current operations, as well as the uncertainty relating to the trading conditions going forward, the group said.
“In particular, the fuel sector in which Umongo Petroleum operates, has experienced increased volatility and risk, resulting in unprecedented forecasting uncertainty. Consequently, a detailed reassessment of projected cash flows and underlying key assumptions, resulted in an impairment of R105 million, despite the business generating increased revenue in the past year,” Omnia said.
The group’s share price climbed to R31 a share in to intraday trade, before closing at R28.39.
Omnia’s net debt at the end of March amounted to R1.3 billion, down from R4.4bn compared to last year.
The group intends to publish its financial results on or about July 7.
It had notified the JSE of the short extension, which is in line with the market notice issued on April 3 by the Financial Services Conduct Authority in respect of the extension of financial reporting periods due to the constraints placed on companies as a consequence of the Covid-19 pandemic and resultant nationwide lockdown.