The reception area of the Johannesburg Stock Exchange. File picture: Leon Nicholas
The reception area of the Johannesburg Stock Exchange. File picture: Leon Nicholas
JOHANNESBURG - Chemicals company Omnia told investors on Friday that it anticipated hefty losses for the year to March as it grappled with impairments, mounting debt and liquidity woes in Zimbabwe.

The stock closed 0.39percent weaker on Friday at R38.01 a share, valuing the company at R2.63 billion.

“In the 2019 financial year, Omnia experienced adverse market conditions, marked by droughts and late rains, a volatile rand currency, changes in the local and international mining industry, and overall difficult global trading conditions,” the company said in a statement.

Omnia, which intends to launch a R2bn rights offer to reduce debt, said on Friday that headline earnings a share would plunge by 160percent.

Headline earnings would also take a 120percent knock to between 139cents and 59c a share in 2019 from 991c a share in the previous year.

It said basic earnings a share would be more than 160percent lower in 2019 at between 670c and 591c a share from 985c in 2018.

A further impairment of a “problematic debtor” in Angola of R44million was now fully provided for, it said.

Protea Chemicals incurred R35m to restructure its business.

“As a result, annual costs of R75m have been removed from the business on an ongoing basis. However, this full benefit will only come through in the 2020 financial year,” said the company.

It said phase two of the process had commenced, which would result in additional annual savings and improved quality of business as part of its newly developed strategy.

“Notwithstanding these actions, management included an impairment of the entire goodwill balance of R324m due to historical performance,” the company said.

Omnia, which acquired Oro Agri, the research company, for R28m in 2018, said it had borne the brunt of the drought with the emerging farmers programme and continued to be under stress linked to the financial pressure experienced by farmers.

“To this end a further provision has been made for expected losses.”

Meanwhile, both businesses in Zimbabwe, Fertilizer Zimbabwe and Acol Chemical, had been impacted by an intentional slowdown in business due to the liquidity constraints in the country.

“In addition, their financial results have been reduced by R95m to approximately one quarter of their nominal value, following the introduction of an alternative currency in Zimbabwe through the impact of the accounting treatment on the change in functional currency,” it said.

Omnia, whose chairperson Rod Humphris stepped down last week, is trading at its lowest levels since 2005, said Karin Richards, a technical trader, on Friday. “Omnia has lost 84percent of its value since the high in 2014,” said Richards.

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