Omnia Holdings Limited (Omnia), a JSE-listed diversified chemicals group, recently published its annual results for the financial year ended 31 March 2020. The group reported solid results, reflecting finalisation of its stabilisation plan that included the successful recapitalisation of the business.
The group’s balance sheet and debt profile were significantly strengthened in the past year following an over-subscribed rights issue of R2 billion in September 2019 and the finalisation of a new debt package at the end of December 2019. The group generated cash from operations of R2,2 billion for the 2020 financial year. As at 31 March 2020, net debt had declined to R1,88 billion (R4,4 billion in 2019), while total assets had increased to R18,1 billion (R16,6 billion in 2019). As at 31 March 2020, debt covenants were comfortably met and the group had access to R3,7 billion undrawn debt facilities.
Driving long-term sustainable value
Omnia’s CEO, Seelan Gobalsamy, commented: “The robust execution of our turnaround plan has positioned Omnia strongly. The excellent results achieved thus far provide the foundation to continue driving long-term sustainable value, enhancing efficiencies and optimising returns. This approach remains especially critical given the significant structural changes in our sectors and the uncertainty created by the COVID-19 pandemic.”
Building on the foundations of the stabilisation plan, the adoption of prudent financial management resulted in improved performance across all business units during the 2020 financial year, with all three divisions improving profitability significantly despite difficult economic conditions globally.
Revenue remained stable at R18,7 billion and operating profit increased to R789 million (R24 million in 2019). Omnia’s earnings before interest, tax, depreciation and amortisation (EBITDA), excluding impairments, increased to R1,8 billion in the 2020 financial year (R979 million in 2019), while headline earning per share (HEPS) increased to 189c, from a loss of 97c per share in the 2019 financial year.
Turnaround strategy for improved cash flows
The turnaround focus during the financial year was on reducing costs, increasing margins, managing working capital more effectively and ensuring a return on capital previously invested. All these measures have produced improved cash flows and supported strong earnings growth for the group.
Since taking over the role of CEO in August 2019, Gobalsamy has embarked on a comprehensive review of all business divisions, markets, assets and footprint to reposition the group and drive the turnaround plan. In support of this plan, Omnia has adopted a CAPEX-light expansion approach while strengthening its leadership to drive a culture of performance across the group.
“Both the mining and chemicals divisions have been strengthened through restructuring processes over the past two years. Changes to the SADC business model have also been initiated to create market-facing SADC businesses and a separate manufacturing unit, focused on production excellence. These decisive management actions to improve efficiencies and respond to market needs will support Omnia’s performance in the future,” added Gobalsamy.
Since the start of the COVID-19 pandemic, Omnia has continued to deliver essential services, including primary chemicals and solutions for the agriculture, mining, manufacturing and fuel sectors, which play an essential role in food security, economic stability and the livelihoods of people globally.
Delivering essential services to customers
Omnia continues to take extensive measures to ensure the welfare of its people and partners around the world, while delivering essential services to its customers. Omnia’s internal policies and risk management practices are constantly reviewed and updated to ensure that they continue to align to the rapidly evolving health and economic situations.
Gobalsamy concluded: “The unprecedented disruptions since the start of the year have added to the headwinds facing our businesses, but mostly my heart goes out to those whose lives and livelihoods are threatened by the outbreak of this pandemic. Against this backdrop, we remain totally focused on ensuring safety, continuing our prudent cash management strategy and the disciplined execution of the turnaround plan, positioning Omnia for an environment where social and climatic conditions as well as the sectors we service become more unpredictable and volatile.” – Press release, Omnia Holdings Limited