Omnia

  • Omnia   is a manufacturer and dealer of a range of products to the agricultural,   mining, and chemical sectors in South Africa, in addition to a growing   footprint in West Africa, Indonesia, Australia, and North America, with the   same customer as its local operations.

  • Strong tailwinds as a result of a bumper agricultural season and a   commodity boom resulted in a significant turnaround of the company’s   fortunes, from a highly geared operation to that of a strong balance sheet.

  • Cash on hand for the year ended 31st March 2021, swung from a debt   of R1.9bn to a positive balance of R1.3 bn assisted by the chemical product   profile of its customer base. This was a massive achievement in the face of   the prevailing Covid-19 pandemic conditions.

  • A new management team was instrumental with a disciplined approach   to costs, which saw a working capital reduction of 24% with curtailed capex   management. This resulted in margin expansion and strong cash generation in   addition to the sale of the non-core Oro–Agri operation.

  • The new CEO Seelan Gobalsamy, said that “nothing has been normal.   It’s been a topsy turvy time and this is a credit to the quality of   management execution in abnormal times - aided by a R2 bn capital raise   during the past year.”

  • The geographic expansion is a positive for Omnia, with a resumption   of global growth in its core areas of operations such as mining and   Agriculture. Global growth prospects for its operations look positive.

  • The strong balance sheet, due to proactive management, will enable   Omnia to gradually grow its presence in existing markets where it already   operates outside of SA, in the areas of its core operations in the mining and   agricultural segments.

  • Such was the success of the turnaround and cash pile on the balance   sheet, that the company has announced a distribution to shareholders of R1bn   in the form of an ordinary dividend of R2.00 per share and a Special dividend   of R4.00 per share.

  • This constitutes the resumption of dividend payments after three   years of no dividends payments. This was due to the highly indebted position   of the company under the previous regime which went on an extensive expansion   in a period of major global downturn, and was impacted by the prevailing   Covid pandemic. Management believes that there is still work to be done to   enhance profitability and dispose of assets such as property and other   non-core assets, with a focus on increasing returns on invested capital.

  • The company operations are cyclical and investors should be aware of   the volatility impacting on the groups’ operations. However, the company is a   high quality business, with strong cash generation, prospects of global   diversification, a competent management team, and can be accumulated in   period of market weakness. The PE ratio of around 14.6x is not onerous, with   the prospects of attractive dividend and a market cap of R9.3bn.

Omnia