Origin reveals future expansion hopes as profits soar to €86m
Published 23/09/2011 | 05:00
Origin Enterprises chief executive Tom O'Mahony believes future expansion of the agri-group is likely to focus on countries such as Poland and Ukraine, where there are significant opportunities to grow existing cereal yields.
But speaking to the Irish Independent as Origin reported a 16.8pc rise in its agri-services revenues to €1.25bn for the year ended in July, and a 10.9pc increase in group operating profit to €86m, Mr O'Mahony said the group would concentrate for now on bedding down acquisitions made in the UK over the past number of months.
However, he declined to comment on speculation that a private equity house had been eyeing up a €300m-plus bid for the group in recent weeks.
Operating profit at Origin's agri-unit jumped 29.3pc to €65.9m during the year, while group revenue was 2.6pc lower at €1.3bn for the financial year.
Origin -- which was spun out of food group IAWS a number of years ago and is 71pc owned by Aryzta -- saw the revenue contribution from its food division fall 83pc after accounting for its Valeo Foods interest as an associate undertaking.
Valeo, in which Origin owns a 44pc stake, is in the process of merging with Jacob Fruitfield, resulting in a group that will own a range of brands including Roma, Silvermints, Batchelors, Odlums and Picnic and have revenues of about €300m.
Origin will own 32pc of the enlarged group and will inject €7.9m into it. That deal is expected to close this day next week.
Mr O'Mahony said that while there were challenges for Valeo, he remained optimistic for the business and progress had been "solid".
"The consumer backdrop is very, very fragile and with declining consumer spend that's making for a very competitive trading environment right now. We see a relentless drive for value," he said.
Origin's core agri-business has undergone a significant transformation over the past year, with a number of acquisitions strengthening its position in the UK.
Apart from supplying feed and fertiliser, Origin also provides on-farm technical know-how to help cereal and other farmers improve yields. In the UK, Origin's businesses are now "directly influencing" 33pc of total arable production there, and 55pc of all primary fruit production. The group also has stakes in businesses in Poland and Norway.
"We're firmly repositioned now," said Mr O'Mahony, who added that Origin's business in Ireland had been tougher in the last financial year due to better grass growth that reduced the requirement for feed. More dairy farmers also had reduced feed requirement as they neared their quotas.
"Our farming is in great shape," Mr O'Mahony pointed out. The recent grain harvest in Ireland was one of the best on record with bumper yields, while milk prices had also strengthened since 2009.