Operating profit tops €70m at Origin
Operating profit at Dublin-listed Origin Enterprises increased by 4.1pc to €70m, primarily driven by higher volumes in agronomy services and inputs, together with improved year-on-year margins.
Underlying operating profit at the agri-services group increased 12.3pc year on year at constant currency, according to the company’s preliminary results statement.
Group revenues increased by 0.5pc year-on-year to €1.5bn.
On an underlying basis in constant currency, revenues increased by 3.4pc year-on-year.
Adjusted diluted earnings per share at the group, which has operations in Ireland, the UK, Poland, Ukraine and Romania, were up 4.7pc to 46.62 cent, which was ahead of guidance, and up 14.7pc on an underlying basis at constant currency.
The movement in earnings per share was driven by an increase in like-for-like underlying profits, however the result was partly off-set by a reduction in earnings per share as a result of foreign currency translation, most notably in respect of the translation of sterling earnings into euro.
Speaking to Independent.ie, Origin CEO Tom O’Mahony said that there had definitely been a strong underlying performance within the business, which more than off-set sterling depreciation.
Mr O’Mahony also said that the company results had been pretty evenly distributed across the entire business.
Profit from associates and joint-ventures was down 22.3pc to €4m, which Mr O’Mahony said was mainly margin driven and currency related,
"We would have seen higher volumes in the feed business but it was off-set by currency and margins," he told Independent.ie.
On the matter of sterling depreciation Mr O’Mahony referred to it as a "double edged sword" which had clearly impacted transactions, but he said that it had benefited local output prices in the UK for farmers.
"What you have to watch for is any input price inflation in the cost. Clearly growers [in the UK] have benefited [from sterling depreciation] this year from a difficult period in 2016.
We will see the re-emergence of input price inflation at some point, but we have not seen it yet," he said.
On the issue of Brexit, Origin said that it was "too early" to assess the longer term implications of Brexit following the UK referendum vote.
The group is planning a number of scenarios which will be updated as the Brexit outcomes become clearer,
"We are confident that our business model is well placed to address the challenges and opportunities that may arise," Origin said.
Looking to 2018 Mr O’Mahony said that the planning backdrop is more stable today for Origin’s primary producers. However he said that it was too early for Origin to be giving guidance as the company is substantially a second half of the year business.
"Farm sentiment while is has improved, but is still cautious, we are very well positioned technology and balance sheet wise," Mr O’Mahony said.