TIDMOGN
RNS Number : 6438F
Origin Enterprises Plc
18 November 2020
Origin Enterprises plc
Q1 Trading Update
Returning to more normalised autumn/winter cropping levels
Dublin, London, 18 November 2020 . Origin Enterprises plc
('Origin' or 'the Group'), the international Agri-Services group,
providing specialist agronomy advice, crop inputs and digital
agricultural solutions to farmers, growers and amenity
professionals, today issues its FY21 Q1 Trading Update for the
three months ended 31 October 2020.
This trading update coincides with the Group's Annual General
Meeting which is being held today at 11:00 (GMT), with limited
attendance due to COVID-19 Government restrictions, at Origin Head
Office, 4-6 Riverwalk, Citywest, Dublin 24. See
https://originenterprises.com/investors/agm for further
details.
Overview
There has been a slow start to trading in the seasonally quiet
first quarter of the financial year, reflecting delayed harvests
and dry planting conditions in certain of the Group's geographies,
early in the period. Group Revenue was EUR318.3 million for the
three months compared to EUR371.2 million in the corresponding
period last year, representing a decrease of 14.3%. On an
underlying constant currency basis, revenue declined by 10.7%,
reflecting an underlying volume reduction of 3.3% in sales of seed,
crop protection and fertiliser in the period, together with the
movement of fertiliser prices compared to the same period last
year. Pricing of other inputs remained stable or increased year on
year.
Across the Group, the planted area for autumn and winter crops
is expected to be broadly in line with the prior year, with an
increased cropping area in the UK, offset by reduced cropping in
Continental Europe. The improved level of autumn plantings in the
UK is expected to deliver increased agronomy services, seed and
crop protection volumes in FY21 compared to FY20 with a positive
impact on Group Operating Profit as is anticipated in current
analysts' estimates.
The Group continues to closely monitor COVID-19 developments.
The Group's agricultural supply chain businesses continue to
implement a range of measures across each location to ensure a safe
environment for all stakeholders, while maintaining essential
services to the agriculture sector.
Group Revenue
Constant
Currency(2)
Q1 FY21 Q1 FY20 Variance Underlying(1) %
EUR'm EUR'm % %
------------------------ ---------- ---------- ---------- --------------- -------------
Ireland / UK 181.9 199.8 (9.0%) (7.8%) (7.8%)
Continental Europe 77.7 90.1 (13.8%) (8.8%) (8.8%)
Latin America 10.6 10.9 (2.9%) 39.1% 39.1%
Total Agronomy and
Inputs 270.2 300.8 (10.2%) (6.4%) (6.4%)
Crop Marketing 48.1 70.4 (31.7%) (29.2%) (29.2%)
Total Group 318.3 371.2 (14.3%) (10.7%) (10.7%)
(1) Excluding currency movements and
the contribution of acquisitions
(2) Excluding currency movements
------------------------------------------------ ---------- ---------------
Ireland and the UK recorded a decrease in underlying agronomy
services and crop input volumes of 3.3% in the period. A delayed
harvest contributed to the ongoing reduction in t he area of oil
seed rape planted in the UK, with plantings expected to be down
12.2% on the prior year at 0.3 million hectares. This, together
with a carryover of stock on-farm, impacted crop input volumes in
Q1. Planting of winter wheat is ahead of the same point in FY20,
but not as progressed as FY19. Nonetheless this has resulted in a
forecasted increase of 72.9% to 1.8 million hectares compared to
FY20. The t otal autumn/winter planted area is expected to return
to more normalised levels and is now forecast to be c. 51.7% higher
than last year at 2.5 million hectares. Combined winter and spring
plantings for the 2021 crop production year are expected to be c.
10.7% higher at approximately 4.4 million hectares, with much of
the fallow area of last year returning to cropping.
Business-to-Business Agri-Inputs had a satisfactory start to the
financial year, recording fertiliser and animal feed ingredients
volumes broadly in line with Q1 FY20. The Group's Amenity business
recorded a solid start to the year, with the improved performance
benefitting from the easing of COVID-19 restrictions in the period,
and the recovery of some of the volume lost in the second half of
FY20 as a result of the pandemic.
Digital Agricultural Services has maintained the positive
momentum of FY20, with over 1.4 million hectares on-boarded to the
Group's digital platform, compared to 1.0 million hectares in Q1
FY20. As we continue to embed our digital decision support services
across the Group's established routes-to-market, enhancement of
functionality remains a key priority which will be rolled out to
farmers ahead of the main spring input application period in
2021.
Continental Europe recorded an underlying volume reduction in
agronomy services and crop inputs, excluding crop marketing
volumes, of 7.0% in the period. There was a good start to the year
across the segment, although prolonged dry ground conditions
moderately impacted plantings in Romania and Ukraine. Overall, t he
expected autumn/winter planted area is forecasted to reduce
marginally across our CE markets. The Group's Belgian fertiliser
business made a solid start to year, with performance in line with
expectations.
In Poland , autumn and winter plantings are anticipated to be
1.5% behind the prior year at 4.7 million hectares, driven by a
1.6% decrease in the planted oil seed rape area. The total cropping
area for the 2021 growing season is expected to be broadly
equivalent to last year at 8.1 million hectares.
In Romania , autumn and winter plantings are anticipated to be
3.3% behind the prior year at 2.9 million hectares. Dry conditions
across much of Romania early in the period led to delays in
plantings which recovered to an extent following rainfall at the
end of the period. The reduction is expected to be partially offset
by higher spring plantings, including sunflower. Combined winter
and spring plantings for the growing season are currently
anticipated to be 1.8% behind last year at 8.2 million
hectares.
In Ukraine , total autumn and winter plantings are anticipated
to be 6.1% behind last year at 7.7 million hectares. This is
primarily driven by prolonged dry conditions early in the quarter,
followed by subsequent wetter in-field conditions which curtailed
planting activities. The decrease in autumn winter plantings is
expected to transfer to spring cropping, with combined autumn and
spring plantings currently forecast to be in line with last year at
23.3 million hectares.
Latin America delivered a satisfactory contribution in the
period, recording an underlying increase in agronomy services and
crop input volumes (excluding crop marketing volumes) of 25.1%.
This performance was as a result of early sales to our distributor
network in anticipation of an increased cropping area despite
delays to the soya planting season as a result of dry conditions
experienced in the period.
The total cropping area dedicated to soya, Brazil's principal
crop, is expected to increase by 3.5% when compared with the prior
year to 38.3 million hectares. The dry conditions resulted in soya
plantings being behind for the period, however following rainfall
in late October plantings have recovered and are now in line with
last year.
Outlook
With the normalisation of crop plantings following an extremely
challenging weather year in FY20, the Group expects improved
agronomy services and crop input volumes and a return to operating
profit growth in FY21. Weaker emerging market currencies, the
continued possibility of Brexit without a trade deal on 31 December
2020 and the ongoing COVID-19 pandemic still represent challenges
for the Group in FY21. Our scalable business model, diversified
market positions, prudent risk management and capital allocation
strategy, leave us well positioned to address these challenges. A
further update on cropping status and farming activity ahead of the
Group's main trading season in the second half will be provided at
the time of the Interim Results announcement in March 2021.
S
Enquiries
Origin Enterprises plc
Sean Coyle
Chief Executive Officer Tel: +353 (0)1 563 4959
Brendan Corcoran
Head of Investor Relations and Group
Planning Tel: +353 (0)1 563 4900
Goodbody (Euronext Growth (Dublin)
Adviser)
Finbarr Griffin Tel: +353 (0)1 641 9278
Davy (Nominated Adviser)
Anthony Farrell Tel: +353 (0)1 614 9993
Numis Securities (Stockbroker)
Stuart Skinner Tel: +44 (0)20 7260 1314
FTI Consulting (Financial Communications
Advisers)
Jonathan Neilan/ Patrick Berkery Tel: +353 (0)1 765 0884
About Origin Enterprises plc
Origin Enterprises plc is an international Agri-Services group,
providing specialist agronomy advice, crop inputs and digital
agricultural solutions to farmers, growers and amenity
professionals. 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) OIZ
ticker symbol:
AIM ticker symbol OGN
Website: www.originenterprises.com
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