Strong second half lifts Origin

Revenue and operating profit at Origin Enterprises fell in the year to July 31st, but the company said it performed ahead of expectations as the outlook for farm incomes improved.

In its preliminary results released this morning, the group said revenue fell 11.3 per cent to €1.3 billion compared to the previous year, while operating profit was down 2.5 per cent to €77.4 million.

The fall in revenue was seen throughout the business, with agri-nutrition down 11.2 per cent to €1.1 billion. The food sector, which remains “challenging", according to the firm, was down 11.9 per cent to €260.1 million as selling prices fell due to lower raw material costs and the company closed inefficient milling capacity.

The second half of the year saw a better performance, with operating profit rising 9.1 per cent over the six months compared to a 24.1 per cent fall in the first half of the year. The overall figure for the year was hit by the weakness of sterling against the euro.

Chief executive Tom O'Mahony said an improving outlook for farm incomes has resulted in a return to more normal demand patterns across agri-services.

“While the trading environment in food remains challenging, sustained progress in the delivery of cost reductions and the successful alignment of our brands with consumers' current spending patterns contributed to a resilient result in the period,” he said.

Origin increased its dividend by 12.5 per cent to 9 cent per ordinary share for the period.

Earlier this month, Origin announced it was merging its food division with Batchelors to create Valeo Foods. Mr O’Mahony said this was an important repositioning of the group's food interests.

“Origin is now a focused agri-services group committed to the delivery of value added services, technologies and strategic inputs which support the delivery of sustainable and profitable solutions for primary food producers,” he said.

The deal is being backed by venture capital company CapVest, which will take a 55 per cent share in the new entity. Origin Enterprises will have a 45 per cent share.