OM Holdings’ Loss Signals Risks Amid Delayed Mining Restart and Tshipi Sale Uncertainty

Financial Performance Overview

OM Holdings Limited (ASX, OMH) revealed a challenging first half of 2025, reporting a loss after tax of US$9.6 million, a stark reversal from the US$12.9 million profit recorded in the same period last year. Despite this, revenue remained largely stable at US$309.3 million, buoyed by increased manganese ore volumes and higher average selling prices, which offset declines in alloy sales volumes and softer ferrosilicon prices.

The company’s EBITDA fell significantly to US$19.1 million from US$46.6 million in H1 2024, reflecting margin compression and operational headwinds. Gross profit margin shrank from 19% to 7%, primarily due to lower ferrosilicon prices amid subdued steel mill demand and heightened competition from Russian suppliers.

Segment Performance and Operational Challenges

The mining segment remains on care and maintenance with no revenue contribution, as the Bootu Creek Manganese Mine has been inactive since January 2022. Production trials at the Ultra Fines Plant encountered feed inconsistencies, delaying any restart plans beyond 2025.

OMH’s smelting operations, centered on its FeSi and manganese alloy smelter in Sarawak, saw revenue decline to US$225 million due to lower alloy sales volumes. This segment swung to a negative contribution of US$8.8 million, compared to a positive US$23.4 million in the prior period, impacted by the absence of inventory write-backs and weaker market prices.

The marketing and trading division recorded a slight revenue increase to US$326.8 million, driven by higher ore trading volumes, though profit contribution dipped marginally. Corporate and other services segments showed modest growth in revenue and contribution.

Balance Sheet and Capital Management

OM Holdings reduced its total borrowings from US$219.7 million to US$181.2 million, improving its borrowings-to-equity ratio to 0.44 from 0.52. The company successfully refinanced its Sarawak project loans, lowering finance costs by 20%. However, cash reserves declined to US$44.1 million, down from US$67.9 million at year-end 2024, reflecting operational cash outflows and working capital movements.

Inventories decreased due to consumption and write-downs, while trade receivables and payables shifted due to timing and strategic transactions, including regaining a 90% stake in OM Materials (Qinzhou) Co Ltd.

Strategic Asset Sale and Outlook

In a notable development, OM Holdings entered a conditional agreement to sell its 13% effective interest in the Tshipi Borwa Manganese Mine for approximately US$105.7 million. This stake, held via a strategic partnership with Ntsimbintle Holdings, has contributed steadily to earnings and dividends. The sale is subject to several conditions, with the process ongoing, marking a potential significant capital event for OMH.

While the company navigates market softness in ferrosilicon and operational delays in mining, the refinancing efforts and potential proceeds from the Tshipi sale could provide financial flexibility. Investors will be watching closely for updates on the sale completion and any operational improvements that could restore profitability.