Irish-headquartered Origin Enterprises expects Brexit boon

Brexit will cause British agriculture to consolidate, providing a boon for Irish agri-services group Origin Enterprises, the company's chief executive said.

Speaking at the group’s annual general meeting (agm) on Friday, Tom O’Mahony said agriculture in the United Kingdom will transition to “greater scale” because the sector has the capacity to consolidate.

“If you take the longer term direction of travel on Brexit, I think that is positive for our business,” Mr O’Mahony told reporters after the meeting.

“Our role is to help our farmers drive the actual efficiency. I am not pessimistic about the state of British agriculture. I think it’s very well established.”

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The agm came after the Dublin-headquartered company reported revenues up 24 per cent in the last quarter to €430 million.

Group revenue for the three months to the end of October compared to €346.7 million in the corresponding period last year. The three months represents the first quarter of the company’s financial year.

Turnover for the Republic and the UK was up 19.2 per cent to €261.5 million from €219.5 last year.

“Ireland and the UK delivered a good performance recording underlying volume growth in agronomy services and crop inputs of 14.4 per cent in the period,” the company said.

“In particular, this performance was positively supported by seasonal timing and volume contribution from the Bunn fertiliser business which was acquired in the prior year.”

Positive start

Overall, Origin said it had been “a positive start to trading” for the 2019 financial year in what is a “seasonally quiet” first quarter.

“Demand levels for agronomy services and crop inputs were strong in the period, supported by a combination of early season timing and generally improved sentiment on-farm,” it said.

“The planting profile for autumn and winter cropping is broadly favourable across our markets.

“The seasonality of Origin’s revenue and earnings profile has historically followed the northern European growing season, resulting in over 95 per cent of earnings being generated in the second half of the Origin financial year.”

The balance of this seasonality profile is expected to change following the group’s acquisition of the Fortgreen business in Brazil, which completed in August 2018. The group will now have an exposure to southern hemisphere growing seasons.

“Having greater geographical diversification is important,” Mr O’Mahony said in response to a question as to how Origin is addressing climate change and poor weather which had an impact on last year’s results.

“It’s not a reason to go to a particular geography . . . but it’s becoming more and more an issue.”

More than 65 per cent of Fortgreen’s earnings typically arise in the first half of the Origin financial year, which result in additional revenues and higher margin earnings being recognised in the first half.

All resolutions were passed at the company’s agm.