Origin Enterprises shares soar as half-year profits rise
Published 11/03/2011 | 05:00
SHARES in Origin Enterprises soared yesterday after the company reported strong half-year profits and announced two acquisitions.
The agri-services group, which is majority-owned by Swiss food giant Aryzta, said it bought British agronomy services firms United Agri Products (UAP) and Rigby Taylor for £33m (€38m) and £9.2m (€10.7m) respectively. A further £4m (€4.65m) will be paid to UAP in 2013, while Rigby Taylor may receive another £1m (€1.16m), depending on performance.
UAP is seen as a very significant purchase. The firm, which is similar to Origin's Masstock business, had an operating profit of £5.9m (€6.86m) in the year to August 1 last year. It is said to be focused on arable, fruit and vegetable growers, while Rigby Taylor is known for working on professional sports turf. The two firms are expected to contribute around 3.5c per share over the second half of the year.
News of the acquisitions came as the company reported first half earnings that showed a 14pc increase in operating profit to €24.04m on the back of revenue that increased 3pc to €613m. This meant adjusted earnings per share for the period increased by a third to 32pc. Net debt was almost halved to €98.7m.
The growth was driven by the agri-services sector, which increased revenue by 61pc. The food division shrank after the consumer brands arm of the company was spun out into a separate entity in October and the end of a contract with Masterfoods.
Chief executive Tom O'Mahony was pleased with the results, in particular the agri-services division, and welcomed the acquisitions. "Improving market conditions for primary producers have supported an excellent performance by our agri-services division reflected in further growth in Masstock's full service prescription agronomy offering and increased sales volumes of farm inputs."
Davy Stockbrokers' John O'Reilly welcomed the results and acquisitions. "Specialist agronomy has been added [to the business] which can generate revenue synergies for agri inputs," he said.
While UK-centric, it may have more potential overseas than Masstock Poland. This has branched out to solutions and applications for turf management. "All the while, there has been aggressive cash flow and balance sheet management," he added. Bloxham's Joe Gill agreed, and said a full-year earnings of 40c per share were possible. Origin shares closed up 4.44pc at €4.