Prolonged unseasonal weather dampens Origin Enterprises sales
Agri-services group said revenues slumped 14 per cent in the company’s first quarter
Origin Enterprises chief executive Tom O’Mahony. Photograph: Eric Luke/The Irish Times
Shares in Origin Enterprises slumped almost 10 per cent on Wednesday after the agri-services group said sales slipped 14 per cent between August and September on account of prolonged unseasonal weather.
Revenue fell 13.7 per cent to €371 million in the company’s first quarter, down from €430 million at the same time last year. When currency movements and the affect of acquisitions are discounted, the result was worse again with a fall of 14.4 per cent reflecting a “volume reduction of 22 per cent in sales of seed, crop protection and fertiliser in the period”.
Shares had fallen to €4.04 by 9am, having closed at €4.48 on Tuesday. The shares closed 7.3 per cent weaker on Wednesday evening at €4.16.
Origin said group operating profit for the full year is “expected to be negatively impacted” as a result of reduced autumn crop plantings caused by the unseasonal weather. It said this will mean the company will have a higher level of spring plantings.
“Highly challenging” conditions in Ireland and Britain have led Origin to forecast that its total cereal and oil seed rape planted area will be 25 per cent lower than last year at 2.1 million hectares.
But in Poland and Ukraine, the company reported a good start to the year. In Poland, autumn and winter plantings are on track to be in line with last year while Ukraine is expected to be slightly behind. Romania will be a laggard.
Origin, which is also active in Latin America, said the challenging weather conditions experienced in its first quarter is expected to lead to “higher concentration of sales demand in the second half and an increased level of seasonality overall in the 2020 financial year”.
“The reduced level of autumn plantings and higher level of spring plantings anticipated, particularly in the UK, means that group operating profit for full year 2020 is expected to be lower than the current range of analysts’ estimates,” the company added.