Tuesday 19 November 2019

Rise in profits and Europe expansion plan gives share boost to Origin

Peter Flanagan

SHARES in Origin Enterprises rose sharply yesterday after the agronomy firm saw full-year profits increase and signalled it will expand into central Europe.

For the year to June 30, the company said profit before tax and exceptional items rose 4pc to €69.4m from €66.2m a year earlier.

Turnover topped €1.4bn for an increase of €83m year on year, while the full-year dividend was upped by more than one-third to 15c a share.

Company chief executive Tom O'Mahony said the group had benefited from the wet summer, which led to a large number of businesses calling in the company for its agronomy skills.

"The impact of unprecedented and challenging weather conditions in the year highlights the volatile nature of the planning environment for primary producers," he said.

"This underscores the strategic role of agronomic innovation to meet the challenge of sustainable intensification and ever increasing production risk," Mr O'Mahony added.

Speaking to analysts, Mr O'Mahony indicated his company was looking to expand beyond its base in the UK and Ireland, with Poland and other parts of Central Europe favoured by the company.

Struggled

Origin already has a presence in Poland, where its Dalgety agri-services business was described as performing "strongly".

Most of the company's divisions performed well, although its fertiliser business struggled due to the wet weather, while Welcon -- its marine proteins and oils joint venture -- had a fall in profits, as expected.

"We haven't expanded the Dalgety business through acquisition, and we see the opportunity as very significant. Poland is an agri-economy going through significant change, with a large area of arable wheat-growing land.

"The agri-services market is relatively fragmented, and we think we can build on that.

"Beyond Poland, we think the Czech Republic and Romania also provide opportunities for us," he added.

Despite the strong operating results, Origin booked an exceptional charge of €16m, mostly on the back of a writedown on the value of its investment property. Origin has a number of buildings in Cork in particular.

Analysts welcomed the results, with Davy Stockbrokers' John O'Reilly pointing to the increased dividend as "an obvious highlight of a very robust reported and underlying performance".

"The increase hallmarks confidence. Cash generation was as good as ever; the balance sheet is very strong and creates plenty of scope to invest; and the investment record is good," he added.

Shares rose as much as 4pc before falling back to close up 1.9pc at €4.30.

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