Origin Enterprises beats estimates as profit rises to €70.3m

Revenue at agricultural services group increases 6.5 per cent to €1.6 billion

Origin Enterprises chief executive Tom O’Mahony said the group was “well positioned to capitalise on its . . . business platforms, development opportunities and strong cash generation”. Photograph: Eric Luke

Origin Enterprises chief executive Tom O’Mahony said the group was “well positioned to capitalise on its . . . business platforms, development opportunities and strong cash generation”. Photograph: Eric Luke

 

Agri-services group Origin Enterprises beat analyst estimates by posting increased profits helped by improved fertiliser and feed volumes at the business.

The company said profit before tax grew 4.3 per cent to €70.3 million in the year ending July 31st, 2018, although a reduction in agronomy service volumes weighed.

Revenue, meanwhile, increased 6.5 per cent to €1.6 billion, about a quarter of which was accounted for in continental Europe. While the European performance was deemed “satisfactory” by the group, it noted the “highly challenging operating conditions” it faced earlier in the year with extreme weather. While business volumes grew in the €431 million segment, operating margins declined.

The year was one in which Origin expanded into Latin America through agreements to acquire two Brazilian agri-service businesses, Fortgreen and Ferrari Zagatto.

With their entry into that market the company said on Wednesday it appointed Declan Giblin to lead the division as Latin America chief executive, effective from October 1st. Mr Giblin is currently an executive director and head of corporate development for the group.

The ongoing diversification of its business allows it to “maintain a flexible approach to dealing with the potential challenges that will arise following Brexit,” Origin said. It added that it was well prepared for any short-term logistical disruption a no-deal Brexit might cause.

Fertiliser and feed

Nevertheless, revenue at the UK and Ireland arm of the business increased 8.7 per cent to over €1.03 billion in the year helped by increased sales in the company’s fertiliser and feed business.

“We have seen steadily improving sentiment on-farm over recent months which may be challenged in the UK by the uncertain nature of Brexit and its timing. The group is well positioned to capitalise on its scalable and diversified business platforms, development opportunities and strong cash generation,” said Origin chief executive Tom O’Mahony.

While Origin beat analyst revenue estimates by 1.2 per cent, the company left its shareholder dividend unchanged at 21 cent.

Davy analysts Cathal Kenny and Roland French said Origin’s results “serve to validate its operating model” given the extreme weather conditions earlier this year. The pair said they envisaged a “slight upward revision” to Origin’s forecasts for the 2019 full-year period.

Listed on Dublin’s ESM market and London’s AIM, Origin focuses on specialist agribusiness services and has a presence in Ireland, Britain, Belgium, Poland Romania and Ukraine.

The company’s annual general meeting is scheduled for November 23rd in Dublin’s Merrion Hotel.