Monday 18 December 2017

Origin results impacted by weather in Poland and UK

Origin also updated its earnings guidance in adjusted earnings per share of between 43c and 46c.
Origin also updated its earnings guidance in adjusted earnings per share of between 43c and 46c.
John Mulligan

John Mulligan

Trading at Origin Enterprises during the nine months to April was "substantially impacted" by poor weather across Ireland, the UK and Poland, according to the company.

The late arrival of spring conditions across northern Europe contributed to a 12pc decline in underlying revenue during the third quarter of its financial year, an outcome the company described as "disappointing".

Third quarter agri services revenue was €555.5m, with underlying year-to-date crop input volumes having fallen by about 8pc due to lower crop protection and fertiliser volumes, partially offset by higher feed volumes.

Business in Poland was hardest hit, with "extremely challenging" trading conditions, and a 25pc slump in like-for-like agronomy revenues. "Service and input demand was reduced following prolonged frost conditions combined with an absence of snow cover across northern and central Poland during March and April," Origin noted.

"This unusual weather pattern led to a loss of circa 1.2m hectares of winter wheat and oil seed rape crops, equivalent to over 20pc of the total winter cropping area."

It added: "Given the seasonality profile and structure of cropping, missed service and input application in the third quarter is not expected to be recovered in the fourth quarter."

Shares in Origin closed 2.3pc higher in Dublin yesterday at €6.40, despite the trading update issued yesterday. The company said demand in the final quarter of its financial year is expected to be higher than last year as growers concentrate activity during the period.

"There has been an encouraging start to the fourth quarter although confidence at farm level remains subdued reflecting the current challenging backdrop to primary output markets which is expected to make for a highly competitive trading environment in the fourth quarter," Origin noted.

The tough conditions had already been flagged with analysts at a recent capital markets day.

Origin said that in the UK, heavy rainfall impacted the business. In Ireland, Origin said that it expects demand for fertiliser to remain strong.

Irish Independent

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