TIDMOGN
RNS Number : 7820R
Origin Enterprises Plc
19 June 2018
Third Quarter Trading Update
Full year guidance in adjusted diluted earnings per share of
between 47.5 and 48.5 cent
19 June 2018
Origin Enterprises plc ('Origin' or 'the Group' or 'the
Company'), the Agri-Services Group, issues this Trading Update for
the nine months to 30 April 2018.
Highlights
-- Robust third quarter performance against a backdrop of
prolonged winter weather conditions resulting in a delay to normal
spring growth and crop maintenance activity
-- Reflecting the later timing of seasonal demand there has been
a positive start to the fourth quarter which is expected to account
for a greater proportion of full year revenue and profitability
-- Digital services enablement progressing well
-- Pillaert-Mekoson, the Belgium-based fertiliser and nutrition
business acquired in January 2018, performing in line with
expectation
-- Full year earnings guidance in adjusted diluted earnings per
share of between 47.5 and 48.5 cent
-- Origin separately announces today agreement to acquire
interests in two Brazil-based agri-service businesses, Fortgreen
Commercial Agricola Ltda. and Ferrari Zagatto E Cia Ltda.
Overview
The performance during the third quarter principally reflected
the adverse impact of unseasonal weather patterns on spring growing
conditions and farm activity in general across the Group's
operations in Ireland and the United Kingdom and Continental
Europe.
Since the period end there has been a return to more normal and
settled weather conditions, mainly in Ireland and the United
Kingdom, which has underpinned a robust level of catch up activity
on-farm to-date. As a result, we expect increased demand for
agronomy services and crop inputs for the fourth quarter.
Reflecting the significant seasonality profile of the Group's
operations, Origin generates substantially all of its profits in
the third and fourth quarters of the financial year.
Review of Operations
Group revenue(1)
Attributable to:
Revenue 2018 2017 Change Acquisitions Currency Underlying
EURm EURm % % % %
-------------- -------- -------- ------- ------------- --------- -----------
Quarter
3 526.7 548.7 (4.0%) 6.2% (2.4%) (7.8%)
Year-to-date 1,113.6 1,113.1 - 4.6% (2.5%) (2.1%)
(1) Total revenue including
crop marketing
------------------------------------------- ------------- --------- -----------
Revenues for the third quarter were 4.0 per cent lower at
EUR526.7 million. On an underlying basis, (excluding acquisitions
and at constant currency) revenue decreased by 7.8 per cent for the
period. The key driver of the decline was reduced sales demand due
to a combination of delayed and lower levels of seasonal activity.
Revenues for the cumulative nine month period were EUR1,113.6
million compared with EUR1,113.1 million for the prior year,
representing an underlying decrease of 2.1 per cent.
Like-for-like business volumes (agronomy services revenue and
crop input volumes, excluding crop marketing volumes) declined 8.7
per cent and 4.0 per cent for the period and year-to-date,
respectively.
Ireland and the United Kingdom
Attributable to:
Revenue 2018 2017 Change Acquisitions Currency Underlying
EURm EURm % % % %
-------------- ------ ------ ------- ------------- --------- -----------
Quarter
3 338.3 342.1 (1.1%) 6.4% (2.0%) (5.5%)
Year-to-date 715.8 697.1 2.7% 5.5% (2.7%) (0.1%)
Volume development in the seasonally important third quarter was
predominantly influenced by a delayed start to in-field crop
drilling and maintenance activity. There was a reduction in
like-for-like business volumes of 9.2 per cent and 4.3 per cent for
the period and year-to-date, respectively.
Integrated On-Farm Agronomy Services
Integrated Agronomy and On-Farm Services, achieved lower
revenues in the third quarter as volume development was impacted by
extremely cold weather which resulted in a four week delay to
normal spring growth and crop development. The situation was
exacerbated by significantly higher than average rainfall levels
during the period which curtailed in-field crop maintenance
activity.
A return to more normal and settled weather conditions towards
the end of the period facilitated the majority of delayed spring
crop planting activity to take place. We are experiencing increased
sales demand in the fourth quarter to satisfy the higher level of
carried forward agronomy service and input application.
More favourable sentiment on-farm currently is helping to
underpin growers' appetite to invest and maximise the potential of
their crops.
Digital Agricultural Services
Digital Agricultural Services performed well in the third
quarter, with the roll out of the Group's digital platform,
Contour, advanced well in the period. Contour is a new digital
information service for agronomists and farmers which incorporates
an integrated suite of whole farm and field level monitoring tools.
Contour brings farmers and agronomists closer together by providing
highly functional and shared applications which deliver real time
content to support in-field crop management decision making.
Over 600,000 hectares have now been on-boarded onto the Contour
platform.
Business-to-Business Agri-Inputs
Business-to-Business Agri-Inputs performed in line with
expectation in the third quarter following a satisfactory result in
the first half of the year.
Fertiliser
Fertiliser achieved higher like-for-like volumes in the third
quarter. This volume performance is largely set against a lower
comparative for the prior year due to the earlier timing of sales
demand in the first half of the 2017 financial year. Volume
development in the fourth quarter is expected to be favourable and
largely reflects the prospect of an extended season for grassland
application for primary livestock producers to replenish depleted
fodder stocks following poor grass growth in the period.
Bunn Fertiliser, acquired in the first quarter of the 2018
financial year, has performed well in the third quarter. The
successful integration of Bunn in the period has provided the
enlarged business with an enhanced capability to service customer
demand in an increasingly condensed spring and summer usage
period.
Amenity
Amenity achieved lower underlying revenues in the third quarter.
This was primarily driven by volume reductions reflecting a reduced
demand due to poor ground conditions caused by unseasonal spring
weather. The professional amenity channel continues to perform well
with the acquisitions completed in 2016 and 2017 providing new and
differentiated product and service offerings.
Feed Ingredients
Feed Ingredients delivered a very satisfactory performance in
the third quarter, underpinned by improved volumes and margins.
Good demand levels were sustained throughout the period as
prolonged wet weather conditions limited grass growth and placed
further pressure on already depleted fodder stocks used for farm
produced feed.
The Group's animal feed manufacturing associate, John Thompson
& Sons Limited, in which the Group has a 50 per cent
shareholding, delivered a satisfactory performance in the third
quarter.
Continental Europe(1)
Attributable to:
Revenue 2018 2017 Change Acquisitions Currency Underlying
EURm EURm % % % %
-------------- ------ ------ ------- ------------- --------- -----------
Quarter
3 161.0 169.8 (5.2%) 7.1% (3.8%) (8.5%)
Year-to-date 282.6 278.3 1.5% 4.4% (3.4%) 0.5%
(1) Excluding
crop marketing
---------------------- ------ ------- ------------- --------- -----------
Revenues from Continental Europe declined by 8.5 per cent in the
third quarter on an underlying basis. This reduction is largely
driven by lower like-for-like business volumes of 7.7 per cent as
the impact of severe weather conditions and low temperatures for
the majority of the period resulted in delayed spring seasonal
growth together with disrupted input application. Against the
backdrop of a shortened growing season in the current year we do
not expect to recover in full the third quarter volume shortfall in
the fourth quarter.
Like-for-like business volumes declined by 3.2 per cent in the
year-to-date.
Belgium
In January 2018, Origin announced the completion of the
acquisition of Pillaert-Mekoson ('Pillaert'), a leading provider of
standard and prescription fertiliser products headquartered in
Ghent, Belgium.
Pillaert has performed well in the third quarter and integration
is progressing as planned. Sales volumes, while lower in the period
against last year due to delayed seasonal timing, are expected to
be favourable for the financial year as a whole.
Poland
Poland achieved a satisfactory performance in the third quarter
on lower volumes in highly competitive trading conditions. Service
and input application was significantly curtailed in the period
following prolonged frost conditions which led to a shortened
spring growing season. Farm sentiment is generally mixed as a
result of the lower crop potential at the end of the period.
Value added agronomy applications delivered a good performance
in the third quarter and continue to drive overall development
within the direct farm customer channel.
Romania
Romania achieved a good performance in the period supported by
the earlier timing of crop input revenues. While there were delays
to normal spring growth, Romania enjoyed relatively normal weather
conditions with farm activity not subject to significant
interruption in the third quarter.
Other than some localised growing areas impacted by drought
conditions, the cropping area is generally well established and in
line with last year at 8.4 million hectares.
Ukraine
Ukraine recorded lower agronomy service and crop input revenues
in the third quarter, largely due to the impact of weather delayed
seasonal timing. The market backdrop is challenging as pronounced
currency volatility, in particular, drives highly competitive
trading conditions which resulted in lower margins in the
period.
New customer gains continue to positively support performance as
the business benefits from its expanded footprint to service the
independent farms channel.
Corporate Development
Origin separately announces today that it has reached agreement
to acquire a 65 per cent interest in the Brazil-based Fortgreen
Commercial Agricola Ltda. ('Fortgreen' or 'the Business'). As part
of this transaction, Origin has also agreed to acquire a 20 per
cent shareholding in Ferrari Zagatto E Cia Ltda. ('Ferrari'), also
based in Brazil, (collectively 'the Transactions').
Fortgreen, which is headquartered in Paraná State in southern
Brazil, and founded in 2004, is focused on the development of value
added crop nutrition and speciality inputs. The Business is an
established leader in the manufacture and marketing of a complete
portfolio of related crop technologies, covering foliar
fertilisers, bio stimulants, adjuvants and control release and slow
release fertilisers. Fortgreen operates a comprehensive research
and new product development capability and services approximately
1,200 customers through an established business-to-business and
retail distribution network.
Ferrari, founded in 1988, and also headquartered in Paraná, is
one of the leading providers of agronomy services, crop inputs and
crop marketing support to grain and speciality crop growers in
Paraná.
The Transactions are subject to a number of conditions and are
expected to complete during the first quarter of the 2018/2019
financial year.
Management Changes
On 7 June 2018 the Group announced the appointment of Sean Coyle
as Chief Financial Officer. Sean will join Origin on 1 September
2018 and will be appointed as a Director of the Company with effect
from 1 October 2018.
Full Year Outlook
There has been a positive start to the fourth quarter reflecting
robust activity levels on farm due mainly to the later timing of
seasonal demand.
The Group expects to achieve full year adjusted diluted earnings
per share in the range of 47.5 to 48.5 cent per share.
ENDS
Enquiries
Origin Enterprises
plc
Peter Dunne
Group Finance +353 (0)1 563
Director Tel: 4959
Andrew Mills
Investor Relations +353 (0)1 563
Officer Tel: 4900
Goodbody (ESM
Adviser)
+353 (0)1 641
Siobhan Wall Tel: 6019
Davy (Nominated
Adviser)
+353 (0)1 614
Anthony Farrell Tel: 9993
Numis Securities
(Stockbroker)
+44 (0)20 7260
Stuart Skinner Tel: 1314
Powerscourt
+353 (0)83 448
Jack Hickey (Ireland) Tel: 8339
Rob Greening
(UK) / Jana Tsiligiannis
(UK) Tel: +44 207 250 1446
About Origin Enterprises plc
Origin Enterprises plc is a focused Agri-Services group
providing specialist On-Farm Agronomy Services, Digital
Agricultural Services and the supply of crop technologies and
inputs. The Group has leading market positions in Ireland, the
United Kingdom, Belgium, Poland, Romania and Ukraine. Origin is
listed on the ESM and AIM markets of the Irish and London Stock
Exchanges.
ESM ticker symbol: OIZ
AIM ticker symbol: OGN
Website: www.originenterprises.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTBVLLFVQFFBBV
(END) Dow Jones Newswires
June 19, 2018 02:01 ET (06:01 GMT)
Origin Enterprises (LSE:OGN)
Historical Stock Chart
From Apr 2024 to May 2024
Origin Enterprises (LSE:OGN)
Historical Stock Chart
From May 2023 to May 2024