Origin posts better than expected results

AGRI-NUTRITION company Origin Enterprises posted better-than-expected full-year results yesterday despite a drop in revenue and operating profits.

Results for the year ended July 31st showed an increase in earnings per share of 3 per cent to 37.26 cent as a strong performance in the second half of the year – the seasonally more important period for the company – offset a poor first-half period.

Revenues were down by 11.3 per cent in the year to €1.3 billion, while operating profit fell 2.5 per cent to €77. 3 million.

However, group EBITA rose by 1. 8 per cent to €82.4 million, with the company increasing its dividend by 12. 5 per cent to 9.0 cent.

The company said its “strong” full-year performance, which beat analysts’ expectations, was due to an improved operating environment for primary producers in the second half of the financial year.

Origin’s agri-nutrition division which includes its farm inputs operations, its UK and Polish-based agronomy services business, Masstock, and its marine proteins division, saw EBITA increase by 3.7 per cent to €67.6 million with an increase of 13.8 per cent in the second half of the year.

The group’s food division, which it is planning to offload as part of a merger with Batchelors, saw operating profits decline by 6.1 per cent due to the competitive trading environment and price deflation. The company described the performance of the food division, which accounted for 20 per cent of revenue during the year, as “resilient.”

Chief executive Tom O’Mahony said yesterday that the company was “very pleased” with the results which he said were due to the good second-half performance of the agri-nutrition division businesses, reflecting improved confidence at farm level. “Particularly there was a recovery in the profitability of the dairy sector in Ireland, which led to more confidence among farmers and as a result more demand.”

Mr O’Mahony said the recent announcement that Origin’s food business is to merge with Irish food company Batchelors to form a new company, Valeo Foods, made strategic sense for the company and would allow Origin to focus on its agri-nutrition business. “The business we inherited from IAWS was a two-platform business. The decision on the food division will allow the company to narrow its focus on its technical agri-services business.”

Mr O’Mahony said the company was in a strong cash-position. The results show a 27 per cent reduction in net debt to €111.9 million.