Big 58% increase in net profitability

Durrant Pate/Contributor

Jamaica’s leading manufacturers of industrial plastic packaging products, OMNI Industries Limited has embarked on an aggressive retolling programme, driven by heightened customer demand and the company’s commitment to promptly fulfilling new orders.

Currently, Omni is in the negotiation phase with suppliers and already one machine, a state‐of‐the‐art injection moulding machine has been commissioned as of September 2024. In addition, OMNI is advancing the acquisition of additional high‐efficiency equipment to increase production, reduce costs, and minimize waste.

The retooling process is being funded by the proceeds from OMNI’s $500-million Initial Public Offer (IPO) in June this year with more funding being utilized to acquire further additional high‐efficiency equipment to increase production, reduce costs, and minimize waste. The company is expanding its technology to increase its product offerings in the market whilst leveraging new equipment capabilities.

With the new technology being acquired OMNI continues to optimize inventory balances to align supply closely with demand. Inventories rose by 18%, reaching $661 million compared to $596 million at the close of the most recent financial year (December 2023). This increase is driven by heightened customer demand and OMNI’s commitment to promptly fulfilling new orders. 

Furthermore, ongoing uncertainties in the shipping and logistics sectors such as shipping delays, elevated freight rates due to geopolitical tensions and port congestion necessitate OMNI maintaining higher inventory levels to ensure a consistent supply. 

Profitability on the rise

Net profit for the September quarter went up by 58% to $38 million coming from $24 million in the same period last year. Year‐to‐date profit reached $146 million, up from $129 million in the previous reporting period, resulting in earnings per stock unit of $0.027 for the quarter and $0.104 year to date. 

This year‐to‐date increase was primarily driven by reductions in cost of sales and finance costs, partially offset by expenses associated with the IPO. OMNI is expected to maintain sufficient cash reserves to meet obligations, as they come due. 

Shareholders’ Equity Shareholders’ equity went up to $946.3 million, an increase of $371.9 million from $574.2 million as of December 31, 2023. This growth is primarily attributed to a year‐to‐date increase in retained profits of $121.9 million, along with additional paid‐in capital of $250.0 million from the IPO.

Managing trade receivables 

OMNI is committed to effectively managing its trade receivables by prioritizing the reduction of balances over 90 days and actively collecting amounts approaching their due dates. As of the quarter under review, receivables totaled $469 million, reflecting a 37% increase from the prior year’s balance of $342 million. This rise is primarily attributed to exports anticipated to be collected in the short term. 

Collections have also been impacted following Hurricane Beryl. Trade payables are classified into foreign and local categories with foreign payables exceeding local payables, due to the majority of OMNI’s manufacturing supplies being sourced internationally.

As of September 2024, total payables amounted to $320 million, reflecting a reduction of $121.6 million, or 28%, compared to $441.9 million as of December 2023. This decrease is a result of prudent management of overall payables balances. 

Long-Term Loans Total long‐term loans have decreased by $45 million, or 15%, to $312 million, primarily due to accelerated pay downs. The company remains committed to optimally managing its long‐term debt while simultaneously increasing both short‐ and long‐term investments.