OM Holdings reversed a loss to report a US$26.3 million profit in 1H 2026, driven by a major asset disposal and improved product margins despite lower sales volumes.
- Profit after tax of US$26.3 million versus loss of US$9.6 million prior year
- EBITDA surged to US$87.0 million from US$19.1 million
- Revenue declined 14% to US$265.2 million on lower manganese ore and ferrosilicon volumes
- Gross profit margin improved to 11% due to higher selling prices
- Total borrowings reduced to US$181.1 million, lowering leverage ratio to 0.40
Strong Profit Turnaround Backed by Asset Disposal
OM Holdings Limited (ASX:OMH) swung to a net profit after tax of US$26.3 million for the six months ended 30 June 2026, a sharp reversal from a US$9.6 million loss in the first half of 2025. This turnaround was largely propelled by a US$50.4 million profit from discontinued operations, stemming from the disposal of its 13% effective interest in the Tshipi Borwa Manganese Mine via the sale of a 26% stake in Ntsimbintle Mining completed in February 2026.
EBITDA and Margins Outperform Despite Revenue Decline
The group’s earnings before interest, tax, depreciation and amortisation (EBITDA) soared to US$87.0 million from US$19.1 million a year earlier, reflecting improved operational profitability. This was achieved despite a 14% drop in revenue to US$265.2 million, mainly due to lower sales volumes of manganese ores and ferrosilicon products. Higher average selling prices for manganese alloys and ferrosilicon, supported by stronger commodity price indices during the period, helped lift gross profit margin from 7% to 11%, pushing gross profit up 40% to US$30.3 million.
Segment Performance Highlights
The smelting segment, which includes the FeSi and manganese alloy operations at OM Sarawak, saw a slight revenue dip to US$216.3 million, reflecting a 9% decrease in alloy sales volumes. However, marginally improved margins reduced its negative contribution slightly to US$8.5 million. Meanwhile, marketing, logistics and trading operations maintained steady revenue around US$327 million but increased their profit contribution to US$10.8 million, benefiting from better product margins.
The mining segment, encompassing the Bootu Creek Manganese Mine, remained under care and maintenance with no production, contributing a US$0.8 million loss due to ongoing expenses. Efforts to restart production at the Ultra Fines Plant faced operational challenges requiring further work.
Balance Sheet Strengthened Through Debt Reduction and Improved Cash
OM Holdings reduced total borrowings by US$32 million to US$181.1 million, lowering the borrowings to equity ratio to 0.40 from 0.50 at the end of 2025. This was achieved through scheduled loan repayments, voluntary early redemption of private bonds, and repayments of revolving credit facilities, partially offset by increased trade financing usage. The group's cash position nearly doubled to US$48.8 million, bolstered by proceeds from asset sales.
Inventories increased to US$299.1 million, attributed to timing differences in raw materials and finished goods, while trade receivables and payables both declined, reflecting normal operational timing shifts. The company reported a net cash outflow from operating activities of US$72.4 million, contrasting with a cash inflow in the prior period, likely linked to working capital movements.
Dividend and Shareholder Returns
The board declared no interim dividend for 1H 2026, reflecting a cautious approach despite improved earnings and cash balances. Net asset backing per share increased 4% to 59.47 US cents, indicating modest balance sheet strengthening. The company has 766 million ordinary shares on issue, with listings on both the ASX and Bursa Malaysia.
Bottom Line?
OM Holdings’ profit recovery is anchored by a strategic asset sale and improved product pricing, but operational challenges and working capital demands warrant close monitoring.
Questions in the middle?
- Will OM Holdings resume production at the Ultra Fines Plant and how will that impact future earnings?
- How sustainable are the current elevated manganese and ferrosilicon prices amid global market volatility?
- Could the company consider resuming dividends or other capital returns given its improved cash position?