Tuesday 26 September 2017

Origin shares tumble 4pc despite 27pc earnings soar

Peter Flanagan

Peter Flanagan

SHARES in Origin Enterprises have dived nearly 4pc despite profits rising by more than a quarter.

The agri-services business, which is majority owned by the Swiss giant Aryzta, said earnings for the six months to the end of January surged 27.7pc to €8.19m on turnover that climbed 12pc to €567.7m.

Those numbers in the first half of Origin's financial year translated into earnings per share which grew 16pc to 7.59c.

The first half is traditionally the slowest for Origin, accounting for barely 15pc of its annual sales.

Origin's main business is agri-services, where it essentially helps farmers get more yield from their land. It also has investments in marine proteins and oils.

Company chief executive Tom O'Mahony described the numbers as a "solid operating and financial performance".

"Performance within Agri-Services was impacted by sustained and unseasonably wet weather in the UK.

"This resulted in lower year-on-year winter arable plantings leading to significantly curtailed in-field operations across our on-farm agronomy services business.

"Growers are actively adapting their management plans and investment decisions to maximise margin opportunity from a larger spring planting area supported by a favourable output price environment," he said.

Looking ahead to the rest of the year, the company said the outlook was "very positive".

"Macro-economic trends provide structural support to the industry (and) we are well positioned for second half of the year," he said.

Pleased

Despite the problems caused by the wet weather, Mr O'Mahony said the performance of the company's joint ventures would help offset any losses.

The company "remains comfortable with full-year analyst expectations of adjusted fully diluted earnings per share of approximately 48.5c".

Analysts were pleased with the results. Davy Stockbrokers' John O'Reilly described the year as a "more normal one" for the company.

"With farm activity returning to normal and spring planting under way (more active this year than usual), Origin foresees a normal H2 profit out turn.

"Momentum at its fish oil business Welcon in the second half of the year is unlikely to be as strong as in H1 but still strong pricing can see it advance later this year. Thus, we retain our full-year forecast," he said.

Goodbody Stockbroker's Liam Igoe highlighted the slide in profits from the agri-services division, but like Mr O'Reilly, was pleased with the strength of Welcon.

"Within Origin's consolidated Agri-Services business, fertiliser sales were flat in Ireland but weaker in the UK as purchasing reflected the deferred cereal planting trend."

Associates were the main contributor to profits in the period, he said.

Nevertheless, he remained "positive on the prospects" of the company long-term.

Even with the generally positive view on the results, shares in the company fell sharply, dipping 3.8pc to €4.81.

Irish Independent

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