TIDMOGN
RNS Number : 1262Q
Origin Enterprises Plc
25 November 2016
Origin Enterprises plc
Trading Update
25 November 2016 - Origin Enterprises plc, the Agri-Services
Group ('Origin' or 'the Group'), issues the following trading
update for the three months to 31 October 2016, in advance of its
Annual General Meeting which is being held today at 11.00am (GMT)
in The Westbury Hotel, Balfe Street (off Grafton Street), Dublin
2.
Overview
Origin had an encouraging start to the 2017 financial year with
all businesses performing well in the seasonally quiet first
quarter.
A combination of generally favourable weather conditions and an
improved planning environment for primary producers in the period
in key geographies led to good early season activity levels
on-farm, resulting in higher demand for the Group's services and
inputs.
The total sown area for the principal autumn and winter crops is
broadly equivalent to last year across the Group's markets. On the
assumption of normal weather patterns, this cropping profile
provides a solid foundation for the seasonally more important
second half of the financial year, which typically accounts for
over 90 per cent of earnings.
Agri-Services
Revenue from Agri-Services, which comprises the totality of
Group revenue, was EUR333.6 million for the three months compared
with EUR300.4 million in the corresponding period last year, an
increase of 11.0 per cent. Underlying revenue increased by 1.3%
reflecting higher seed, crop protection and fertiliser volumes,
largely offset by lower fertiliser and feed prices and lower crop
marketing volumes. Underlying service revenue and input volumes
increased 7.2 per cent in the period. The components of the total
year-on-year increase are as follows:
Revenue Attributable to:
FY16 FY17 Increase Currency Underlying Acquisitions
EURm EURm EURm % % %
Quarter
1 300.4 333.6 33.2 (13.2) 1.3 22.9
Integrated On-Farm Agronomy Services
United Kingdom
Agrii delivered a very satisfactory performance in the period,
recording higher year-on-year revenues and margins. There was solid
momentum across all service and input portfolios as favourable
weather conditions supported crop planting activity in the
quarter.
Primary crop producers experienced a more stable planning and
operating environment in the period with their margins currently
benefitting from a combination of lower unit costs for key macro
inputs and recent sterling depreciation.
Autumn and winter crop plantings are well advanced with
estimates for the total sown area at 2.95 million hectares compared
with 2.96 million hectares for last year. In the case of winter
wheat there is an estimated 1.4 per cent increase in plantings to
1.85 million hectares. Winter oil seed rape sowings are currently
estimated at 0.5 million hectares which represents a reduction of
approximately 10 per cent on last year, largely due to agronomic
and rotational crop planning decisions.
Central and Eastern Europe
Poland
The Group's Polish farm services business now operates under the
Agrii brand following the merger of Dalgety and the Kazgod Group,
which was acquired in the 2016 financial year. Performance was
satisfactory in the seasonally quiet first quarter. This was
against the backdrop of weak farm sentiment due to the impact of
highly unseasonal weather patterns earlier in the calendar year
which resulted in below average crop yield and quality. Agrii's
agronomy portfolios maintained development momentum in the period,
reflecting more focused customer channel management within the
enlarged business.
There has been solid progress with respect to crop sowings in
the period with total plantings for the principal autumn and winter
crops estimated at 6.0 million hectares compared with 5.9 million
hectares for last year.
Ukraine
In Ukraine there was an improved first quarter performance with
new season momentum supporting higher revenues and margins as the
business benefits from the recent expansion of its distribution
footprint.
Market conditions continue to be impacted by currency weakness
which is leading primary producers to adopt more concentrated or
just-in-time procurement patterns.
While crop planting progress has been slower than anticipated
due to below average rainfall in Central and Western Ukraine,
autumn and winter sowings are expected to be ahead of last year.
Total autumn and winter plantings for cereals and oil seed rape are
estimated at 7.6 million hectares compared with 5.8 million
hectares last year. Total forecast plantings for the growing season
as a whole are expected to be equivalent to last year at
approximately 21.0 million hectares.
Romania
Origin's Romanian platform, comprising the farm service brands
of Comfert and Redoxim, delivered a satisfactory performance in the
period. A combination of good early autumn planting and growing
conditions together with new customer development supported higher
underlying revenues, volumes and margins across all service and
input portfolios.
Recent rainfall has delayed the final harvesting of earlier
spring sown crops and curtailed progress on new plantings. The
total sown area for autumn and winter crops is estimated to be 3.15
million hectares compared with 3.25 million hectares last year. The
shortfall is expected to be reflected in higher spring
cropping.
Business-to-Business Agri-Inputs
Ireland and UK
Business-to-business Agri-Inputs achieved a good result in the
period with performance benefitting from a combination of higher
volumes and improved margins.
Fertiliser
Increased volumes were the principal driver supporting
performance of fertiliser in the period. Greater visibility on raw
material pricing is providing confidence to primary producers to
fix a portion of their nutrition requirements ahead of the main
application period in the second half of the financial year.
Amenity
The Group's amenity business performed satisfactorily in the
period underpinned by continuing momentum within the professional
sports turf channel. Headland Amenity, which was acquired in the
fourth quarter of the 2016 financial year, performed well in the
period with the integration progressing to plan.
Feed Ingredients
Feed Ingredients delivered a satisfactory result supported by a
stable year-on-year volume performance.
Associates and joint venture
John Thompson, the largest single site multispecies animal feed
mill in the European Union, in which Origin has a 50 per cent
shareholding, delivered a satisfactory performance during the
period.
Outlook
Although sector sentiment remains subdued reflecting the current
pressures on farm incomes, there has been an encouraging start to
trading in the seasonally quiet first quarter. The autumn and
winter cropping profile established to-date provides a solid
foundation for the seasonally more important second half of the
financial year when over 90 per cent of earnings typically
arise.
The Group is well positioned to respond to current market
conditions and to benefit from a sustained improvement in primary
producer returns.
Enquiries:
Origin Enterprises plc
Imelda Hurley
Chief Financial Officer Tel: +353 (0)1 563 4959
Goodbody (ESM Adviser)
Kevin Keating Tel: +353 (0)1 667 0420
Davy (Nominated Adviser)
Anthony Farrell Tel: +353 (0)1 614 9993
Powerscourt
Jack Hickey (Ireland) Tel: +353 (0)83 448 8339
Rob Greening (UK) Tel: +44 207 250 1446
About Origin Enterprises plc
Origin Enterprises plc is a focused Agri-Services group
providing on-farm agronomy advice and the supply of crop
technologies and inputs. The Agri-Services business through its
manufacturing and distribution operations in Ireland, the United
Kingdom, Poland, Ukraine and Romania has leading market positions
in the provision of specialist agronomy services, crop
technologies, inputs and feed ingredients. Origin is listed on the
ESM and AIM markets of the Irish and London Stock Exchanges.
ESM ticker symbol: OIZ
AIM ticker symbol: OGN
This information is provided by RNS
The company news service from the London Stock Exchange
END
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