Omnia labours under growing debt pile

Is chemical manufacturing firm Omnia Holdings’ debt spiralling out of control?

The company, which will release full-year results in June, attributed the increase in finance expenses to, among others, higher working capital after the acquisition of oil products and lubricants supplier Umongo Petroleum and Oro Agri, the manufacturer of agricultural adjuvants, pesticides and foliar nutrients for agricultural, greenhouse, nursery and turf applications.

The market has been brutal. The stock has fallen more than 31% since the beginning of 2019, compared with a 11% increase in the JSE all share index. The JSE chemicals index is up 10.34% over the same period. Taken over a longer period, the picture is even bleaker. In the past five years, the stock has lost more than 74%, while the all share index has gained 19.60%.

“At this stage, the group and these debt providers are still assessing the appropriateness of the required debt package in light of the group’s operational cycle and industry-specific requirements, and there is no requirement for any unscheduled repayment or recapitalisation,” it said. Clark says the downturn in the mining segment affected the demand for explosives in the domestic market, while the drought in 2016/2017 and the resultant lower crops meant lower demand for fertilisers.

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