Origin profit rises as group shakes off weather, Covid challenges

Agri-services group Origin Enterprises has delivered a "much-improved performance" after the challenges of poor weather and Covid-19 last year, chief executive Sean Coyle said on Wednesday.

Revenue rose 4.4 per cent €1.66 billion in the year to July 31st, with operating profit of €61 million up 38.3 per cent year on year. Group operating margin was 3.7 per cent, up from 2.8 per cent in 2020.

The company attributed the recovery in earnings to increased volumes and improved margins in Ireland and Britain.

Adjusted diluted earnings per share were 35.5 cent, with free cash flow of €49.2 million. Net bank debt was reduced to €14.4 million. Origin is proposing a final dividend of 7.85 cent per share, to give a total dividend of 11 cent.

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“Although we experienced a delayed season in FY21 following prolonged cold weather in spring, more favourable conditions in the fourth quarter resulted in increased demand for agronomy services, crop inputs and amenity products,” he said.

“While the business recovered from a very challenging trading environment in FY20, Covid-19 continued to present operational challenges for the business in FY21. However, as a result of the collective efforts of all our people and the resilience of our business model, we continued to serve our customers, delivering revenue and operating profit growth together with strong operating cash flow.”

Challenges

There had been minimal Covid-related supply-chain challenges, but Mr Coyle said the company was monitoring the situation.

The group also acquired UK equipment manufacturer Greentech during the year, and disposed of its Belgian fertiliser business to focus on others that offered more potential for growth.

“Greentech is an excellent strategic fit for Origin and enhances the offering of our amenity businesses while offering potential in the area of environmental land management and biodiversity enhancement for the group’s agri-focused businesses,” Mr Coyle said. “The group also disposed of its Belgian fertiliser business during the year as it became clear that opportunities for consolidation did not exist in that market.”