Origin Enterprises posts 25.7% drop in pre-tax profits

Agri-services group hit by adverse weather and weak farm income

Pre-tax profits at agri-services group Origin Enterprises fell 25.7 per cent to €65.5 million in the 12 months to the end of July as adverse weather and weak farm income made for a difficult trading environment.

Revenue grew 4.3 per cent to €1.5 billion, however, with sales boosted by strong trading performances from recently acquired businesses in central and eastern Europe.

On a like-for-like basis, excluding the impact of currency swings and acquisitions, revenues fell €54.3 million or 3.7 per cent on an annual basis, reflecting lower input prices and crop marketing volumes.

The contribution from associates and joint ventures was €5.6 million, down 60.1 per cent, mainly due to the disposal of Valeo to CapVest Partners for €86 million in 2015.

Dividend

Adjusted earnings per share was 44.51 cent, a decrease of 25.9 per cent, while the company’s full-year dividend was maintained at 21.0 cent per share.

Chief executive Tom O’Mahony said the company had delivered a “solid operational and financial performance” against a backdrop of a challenging planning and operating environment.

“Highly adverse and unseasonal weather conditions, combined with weak farm sentiment, drove a highly competitive trading environment which negatively impacted the group’s profitability and returns.”

However, Mr O’Mahony said overall performance had benefited from “an excellent result from the group’s central and eastern European farm services businesses acquired in 2016”.

“We remain committed to expanding Origin’s footprint, and will continue to prioritise investment in strategic acquisitions as well as in the further development of the group’s crop management systems and yield technology transfer platforms.”

Davy analyst Cathal Kenny said : "While uncertainty continues to weigh on sector sentiment, Origin's long-term prospects, market positioning and cash generation capability should not be overlooked."