TIDMOGN
RNS Number : 6817C
Origin Enterprises Plc
19 June 2019
Origin Enterprises plc
Third Quarter Trading Update
Full year guidance in adjusted diluted earnings per share of
between 51.5 and 52.5 cent
19 June 2019
Origin Enterprises plc ('Origin' or 'the Group' or 'the
Company'), the Agri-Services Group, issues this Trading Update for
the nine-month period to 30 April 2019, in advance of its final
results which are scheduled to be announced on 25 September
2019.
Highlights
-- 11.4% increase in underlying revenue(1) in the third quarter (12.5% year-to-date)
-- 10.9% underlying growth in volumes for the third quarter (9.5% year-to-date)
-- Over 900,000 hectares on-boarded onto the Group's digital agronomy platform
-- Completion of acquisition of 20% interest in Brazilian-based
agronomy service and crop input distribution business Ferrari
Zagatto
-- Full year earnings guidance in adjusted diluted earnings per
share of between 51.5 and 52.5 cent
(1) Excluding acquisitions and at constant currency
Overview
Origin has delivered a satisfactory performance for the
seasonally important third quarter. Latin America has performed in
line with pre-acquisition expectations with favourable trading in
Ireland & UK more than offsetting the impact of a challenging
market backdrop in Continental Europe, principally in Ukraine.
The Group achieved higher underlying revenues in the third
quarter supported by good demand for agronomy services and crop
input volumes. Third quarter underlying revenue and like-for-like
volume development reflects a more normalised seasonal demand
pattern and is set against a 2018 comparative when crop planting
and crop maintenance activity was significantly delayed due to the
impact of unseasonal and prolonged winter weather conditions
resulting in curtailed spring growth.
Revenue Summary
Revenues for the third quarter were 13.1% higher at EUR595.4
million, with an underlying increase of 11.4% driven by increased
demand for agronomy services and crop inputs. Revenues were
EUR1,297.0 million for the nine months compared with EUR1,113.6
million for the equivalent period last year, an increase of 16.5%
and an underlying increase of 12.5%.
The components of the Group revenue increase against the prior
period for the third quarter and year-to-date are as follows:
Group revenue
Attributable to:
Revenue 2019 2018 Change Acquisitions Currency Underlying
EURm EURm % % % %
-------------- -------- -------- ------- ------------- --------- -----------
Quarter
3 595.4 526.7 13.1% 1.0% 0.7% 11.4%
Year-to-date 1,297.0 1,113.6 16.5% 3.8% 0.2% 12.5%
Review of Operations
Ireland and the United Kingdom
Attributable to:
Revenue 2019 2018 Change Acquisitions Currency Underlying
EURm EURm % % % %
-------------- ------ ------ ------- ------------- --------- -----------
Quarter
3 405.5 338.3 19.8% 0.4% 1.4% 18.0%
Year-to-date 839.4 715.8 17.3% 0.2% 0.8% 16.3%
Higher revenues in the third quarter principally reflect the
benefit of a more normalised demand pattern against a 2018
comparative where a delayed season resulted in the majority of
input activity taking place in the fourth quarter. Underlying
agronomy service and crop input volume growth was 15% and 13.6% for
the third quarter and year-to-date respectively.
Integrated On-Farm Agronomy Services
Integrated Agronomy and On-Farm Services achieved an improved
performance in the seasonally important third quarter, recording
higher revenues and volumes across all service and input
portfolios.
Generally settled weather for the nine-month period supported
excellent in-field and crop planting conditions. Agronomy service
revenue and crop protection volumes grew by over 30% in the third
quarter against the prior year comparative impacted by delayed crop
applications. Favourable operating conditions on-farm together with
the positive impact of sterling depreciation on growers' crop
margins resulted in good demand for agronomy services and inputs in
the nine-month period.
Total autumn, winter and spring plantings for the 2019 growing
season are forecast to be marginally ahead of last year at 4.5
million hectares.
Digital Agricultural Services
Digital Agricultural Services delivered a strong operational
performance in the third quarter, with the focus on product
adoption and the continued delivery of functional enhancements. To
date, over 900,000 hectares have been on-boarded onto the Group's
digital agronomy platform.
In the third quarter, the Group's digital agronomy and precision
farming capabilities were merged under a new identity called Rhiza.
Rhiza delivers solutions to farmers and growers addressing
environmental stewardship, compliance and risk management together
with field level data driven decision support tools to manage crop
performance.
Business-to-Business Agri-Inputs
Business-to-Business Agri-Inputs performed in line with
expectation in the third quarter following a good result in the
first half of the year.
Fertiliser
Fertiliser delivered a satisfactory performance in the third
quarter. Higher underlying volumes for the period reflected a
stable pricing environment and earlier application on farm
following mild and dry weather conditions.
Differentiated and bespoke nutrition applications continued to
maintain solid development momentum in the year-to-date.
Amenity
Amenity achieved a solid performance in the seasonally important
third quarter on lower underlying sales demand.
Volume development for the nine-month period within the
professional and fine turf channels was impacted by excess carried
forward customer stockholdings due to the unseasonal weather
conditions experienced in 2018. Performance was positively
supported by the benefit of new customer gains within the Home
& Garden channel together with the first-time contribution from
Symbio, the speciality organic crop technologies business acquired
in December 2018.
Feed Ingredients
Feed Ingredients achieved a satisfactory performance in the
third quarter recording lower volumes compared with the same period
in 2018, following the exceptional demand levels experienced last
year due to poor grass growing conditions.
The Group's animal feed manufacturing associate, John Thompson
& Sons Limited, in which the Group has a 50% shareholding,
delivered a satisfactory performance in the third quarter.
Continental Europe(2)
Attributable to:
Revenue 2019 2018 Change Acquisitions Currency Underlying
EURm EURm % % % %
-------------- ------ ------ ------- ------------- --------- -----------
Quarter
3 157.9 161.0 (1.9%) - (0.3%) (1.6%)
Year-to-date 305.8 282.6 8.2% 5.4% (0.6%) 3.4%
(2) Excluding crop marketing revenues
------------------------------------------------------------------------------
Underlying revenues from Continental Europe declined by 1.6% in
the third quarter.
Overall performance in the third quarter was impacted by
challenging operating conditions across Continental Europe in the
seasonally important third quarter and in particular a highly
competitive trading backdrop in Ukraine. As a result, margins and
operating profit from the Continental European segment are expected
to be lower for the full year.
Underlying business volumes grew 6.2% and 3.4% in the third
quarter and year-to-date respectively.
Belgium
Belgium achieved a good result in the third quarter. Performance
was supported by favourable margins reflecting pleasing growth in
sales of speciality and bespoke nutrition.
Poland
Poland achieved a satisfactory performance in the third quarter
and year-to-date. Good growth was recorded across all input
portfolios in the third quarter against a shortened comparative
spring growing season when service and input application was
curtailed following prolonged frost conditions. Farmer sentiment in
the current year remains mixed following the reduced 2018 harvest
output.
A total cropping area of 8.1 million hectares for the 2019
season is broadly in line with prior year plantings.
Romania
Romania delivered a solid performance in the third quarter
against challenging operating conditions for farmers and growers.
Sustained dry conditions during the first quarter significantly
reduced autumn and winter oilseed and cereal crop establishment
resulting in lower overall agronomy service and crop input demand
for the nine-month period.
The reduction in autumn and winter plantings has been largely
offset by higher spring cropping. The total cropping area for the
year as a whole is estimated to be 1% lower at 8.2 million
hectares.
Ukraine
Ukraine recorded lower sales margins and operating contribution
for the third quarter on higher underlying revenues and volumes.
Business performance reflected a market characterised by lower
liquidity and excess inventories, resulting in highly competitive
trading conditions. Against this challenging backdrop, the Group
continues to progress business efficiencies and the further
development of high service agronomy channels.
Total crop plantings for the 2019 growing season are broadly in
line with last year at 22.5 million hectares.
Latin America
Attributable to:
Revenue 2019 2018 Change Acquisitions Currency Underlying
EURm EURm % % % %
-------------- ------ ------ ------- ------------- --------- -----------
Quarter
3 3.9 - 100.0% 100.0% - -
Year-to-date 25.2 - 100.0% 100.0% - -
The Latin American reporting segment incorporates the Group's
business operations in Brazil.
Origin made its first-time entry into the Brazilian
agri-services market following the completion of the acquisition of
Fortgreen in August 2018. Fortgreen, headquartered in Paraná State
in southern Brazil, is focused on the development and marketing of
speciality inputs and value-added crop nutrition.
Latin America achieved a good result in the nine-month period
and in the seasonally less significant third quarter. Performance
is in line with pre-acquisition expectations and integration is
progressing to plan. Growth in volumes against the pre-acquisition
period has been supported by good sales momentum in soluble
nutrition technologies for grain and speciality crop
applications.
The agreement to acquire a 20% shareholding in Ferrari Zagatto E
Cia Ltda. ('the Transaction'), the Brazilian based agronomy
services and crop input distribution business, was completed on 12
June 2019. This Transaction was originally announced on 19 June
2018.
Full Year Outlook
Strong performances for Ireland & UK and Latin America in
the nine-month period have more than offset the impact of
challenging operating conditions in Continental Europe.
Overall, there has been a positive start to trading in the
fourth quarter. The Group expects to achieve full year adjusted
fully diluted earnings per share in the range of 51.5 to 52.5
cent.
ENDS
Enquiries
Origin Enterprises plc
Sean Coyle
+353 (0)1 563
Chief Financial Officer Tel: 4959
Brendan Corcoran
Head of Investor Relations +353 (0)1 563
and Group Planning Tel: 4900
Goodbody (Euronext Growth (Dublin)
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
FTI Consulting (Financial Communications
Advisers)
Patrick Berkery / Jonathan +353 (0)1 765
Neilan Tel: 0884
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, Brazil, Poland, Romania and Ukraine.
Origin is listed on the Euronext Growth (Dublin) and AIM markets of
the Irish and London Stock Exchanges.
Euronext Growth (Dublin) ticker symbol: OIZ
AIM ticker symbol: OGN
Website: www.originenterprises.com
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END
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