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RNS Number : 0155C
Origin Enterprises Plc
16 June 2021
Origin Enterprises plc
Q3 Trading Update
Despite challenging spring conditions, the Group is guiding full
year FY21 adjusted diluted earnings per share of between 34.0 and
36.0 cent, up from 25.69 cent in FY20
Dublin, London, 16 June 2021 . 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 Trading Update for the three and nine months ended
30 April 2021.
Overview
The Group delivered a satisfactory performance for the
seasonally important third quarter ('Q3') considering the adverse
impact of prolonged cold weather on farm activity. Despite
reasonably favourable autumn planting conditions, normal spring
farm activity was held back by exceptionally cold conditions in
April, which extended across the whole of Europe.
Persistent cold spring weather and the absence of pest and
disease prevalence in crops has resulted in lower input volumes in
Q3 across our Ireland, UK and Continental European markets. While
overall business volumes are marginally positive year-to-date, this
is set against a comparative period that encountered significant
challenges with extreme weather conditions and the early stages of
COVID-19.
Since the period end, there has been a return to more settled
weather conditions generally, across Ireland, the UK and
Continental Europe, which is driving a level of catch-up activity
on farm. As a result, the Group expects an increase in demand for
agronomy services, crop inputs and amenity products for the fourth
quarter ('Q4').
Revenue Summary
Group revenue for Q3 and year-to-date, compared to the prior
period is as follows:
Group Revenue - Q3
Constant
Currency(2)
Q3 FY21 Q3 FY20 Variance Underlying(1) %
EUR'm EUR'm % %
------------------------------ ----------- ------------- ---------- --------------- -------------------
Ireland / UK 366.4 372.1 (1.5%) (2.4%) (1.2%)
Continental Europe 190.0 196.9 (3.6%) 3.7% 3.7%
Latin America 5.8 1.6 259.9% 312.1% 312.1%
Total Agronomy and
Inputs 562.2 570.6 (1.5%) 0.6% 1.4%
Crop Marketing 35.6 34.2 4.0% 6.9% 6.9%
Total Group 597.8 604.8 (1.2%) 0.9% 1.7%
(1) Excluding currency movements and the contribution of acquisitions
(2) Excluding currency movements
------------------------------------------------------------------------------------------------------------
Group Revenue - YTD
Constant
Currency(2)
YTD FY21 YTD FY20 Variance Underlying(1) %
EUR'm EUR'm % %
-------------------- ----------- ---------- ---------- --------------- -------------
Ireland / UK 710.9 709.5 0.2% 1.2% 1.9%
Continental Europe 312.3 338.9 (7.9%) (1.1%) (1.1%)
Latin America 27.4 23.5 16.9% 58.7% 58.7%
Total Agronomy and
Inputs 1,050.6 1,071.9 (2.0%) 1.7% 2.2%
Crop Marketing 119.6 137.8 (13.2%) (9.7%) (9.7%)
Total Group 1,170.2 1,209.7 (3.3%) 0.4% 0.8%
(1) Excluding currency movements and the contribution of acquisitions
(2) Excluding currency movements
-----------------------------------------------------------------------------------------
Reported Group revenue was EUR597.8 million for Q3, a decrease
of 1.2% on the prior year (an increase of 1.7% on a constant
currency basis), primarily reflecting the impact of delayed
in-field activities and on-farm crop input investment, following
cold spring weather conditions across Ireland, the UK and
Continental Europe.
Group revenue for the nine-months ended 30 April 2021 was
EUR1,170.2 million, a decline of 3.3% year-on-year on a reported
basis (an increase of 0.8% on a constant currency basis). Excluding
Crop Marketing, revenue in our Agronomy and Inputs businesses
delivered constant currency revenue growth of 2.2%, reflecting
volume growth of 1.6%, marginal pricing improvement of 0.2% and an
acquisition contribution of 0.4% in our Amenity business.
Ireland and the UK recorded a reduction in underlying agronomy
services and crop input volumes in Q3 of 4.5% and an increase
year-to-date of 2.4%. Volume performance in the quarter was
challenging, with the cold weather recorded across the UK resulting
in delayed in-field activities and a reduced on-farm spend, despite
a return to a more normalised cropping profile.
Total autumn and winter plantings for principal crops are
estimated to be 42.6%, or 0.7 million hectares, ahead of last year
at 2.4 million hectares. The area of winter wheat is estimated to
be up 62.1% to 1.7 million hectares (1.0 million hectares in
FY20).
Business-to-Business Agri-Inputs has recorded increased volumes
year to date, as demand from trade customers was influenced by raw
material price increases and concerns over product availability.
Volume momentum reduced in Q3 as cold weather conditions influenced
demand, however full year volumes are expected to be ahead of FY20
.
The Group's Amenity business delivered an improved performance
year-to-date, recording increased volumes benefitting from the
easing of COVID-19 restrictions across the UK. In March 2021,
Origin acquired Greentech Limited ('Green-tech') the UK's leading
manufacturer and distributor of landscaping, forestry and grounds
maintenance equipment. Green-tech strengthens Origin's Amenity
business offering with potential in the area of environmental land
management and bio-diversity enhancement for the Group's
agri-focused businesses. Since acquisition, Green-tech has
performed in line with expectations and the integration of the
business into the wider Amenity division is proceeding to plan.
The Group's Digital platform continued to add increased
functionality to farmers ahead of the FY21 growing season. By the
end of Q3 FY21 over 1.6 million active hectares were uploaded to
the platform.
Continental Europe recorded an underlying volume decrease in
agronomy services and crop inputs (excluding crop marketing
volumes) of 1.4% in Q3 and 3.2% year-to-date. Despite a positive
planting profile across our CE markets, cold conditions accompanied
by snow delayed spring activity, with catch-up activity continuing
on farms into Q4. The Group's Belgian fertiliser business performed
in line with expectations.
In Poland , combined autumn, winter and spring plantings for the
2021 growing season are estimated to be 0.9% behind last year at
8.1 million hectares. A marginal reduction in autumn and winter
plantings largely transferred to spring. To date, there has been
satisfactory establishment of spring cereals, with the condition of
winter crops generally strong.
In Romania , the total sown area for autumn, winter and spring
plantings is estimated to be in line with the prior year at 8.4
million hectares. There was a delay in some spring plantings due to
cold weather, however, to date, early crop establishment has been
good. Following dry conditions encountered in the prior year, there
has been sufficient rainfall for robust crop development.
In Ukraine , total autumn, winter and spring plantings are
anticipated to be 0.9% ahead of last year at 24.0 million hectares,
primarily due to a 6.1% increase in spring cropping. Cold weather
has delayed some spring plantings; however, it has also resulted in
an extended planting window. Winter crop establishment has been
satisfactory to date, while the delay to spring plantings has
resulted in later development of those crops.
Latin America recorded an increase in underlying business
volumes in the quarter of 140.0%, in the seasonally quieter second
half. Year-to-date underlying business volumes are 44.9% ahead of
the prior year driven by a significant increase in controlled
release fertiliser sales, together with a 3.5% increase to 38.3
million hectares in the total cropping area dedicated to soya,
Brazil's principal crop and an increase of 9.1% in the cropping
area dedicated to Brazil's secondary crop, maize to 14.4 million
hectares. However, drought in the region is expected to reduce
yield, on average, by 20% per hectare. The Group's new controlled
release fertiliser plant in Varginha, Minas Gerais is expected to
be commissioned in June.
The impact of foreign currency translation has significantly
impacted Latin America's reported performance in the period, with
year-to-date revenues increasing by 16.9% on a reported basis, but
by 58.7% on an underlying basis excluding the impact of currency
movements.
COVID-19
COVID-19 continues to be a challenge to our operations,
particularly in Continental Europe and Brazil. While the Group
continues to implement a range of extensive measures to ensure the
safety of our people and maintain continuity of service to the
agricultural community, in line with government and health
authority guidelines, increased restrictions across some of our
geographies has limited some on-farm access.
Sustainability
The Group continues to progress our sustainability agenda.
Building on the momentum in H1, where we received a positive
first-time CDP score and an improved ESG rating from
Sustainalytics, Origin recently received an improved rating by MSCI
in recognition of our overall ESG performance. Further details of
the Group's sustainability strategy, targets, and progress will be
detailed in our inaugural Sustainability Report, which will be
published later this year.
Current Trading and Full Year Outlook for FY21
Across the Group there has been a positive start to trading in
Q4, benefitting from more settled weather conditions across our
core markets, with a degree of catch-up activity on the delayed
in-field activities and reduced on-farm spend seen throughout
Q3.
For FY21, the Group expects to deliver solid growth in earnings
year-on-year, with full year adjusted fully diluted earnings per
share in the range of 34.0 to 36.0 cent up from 25.69 cent in
FY20.
The Group's Preliminary Results for FY21 are scheduled to be
announced on 29 September 2021.
ENDS
Enquiries
Origin Enterprises plc
TJ Kelly
Chief Financial 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)
+44 (0)20 7260
Stuart Skinner Tel: 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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END
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