A continuation of poor weather in the three months to the end of April coupled with the ongoing decline in feed and fertiliser prices globally have seen revenues at Irish agriservices group Origin Enterprises fall by more than one-fifth in its current financial year.
On Thursday, the Dublin-listed group, which supplies on-farm services, crop technologies and inputs – including feeds and fertilisers – to farmers, said sales reached €1.5 billion in the nine-month period to the end of April. The figure reflects an 5.7 per cent increase in sales volumes compared with the same period last year, Origin said, but one which was “more than offset by significantly lower feed and fertiliser” pricing.
Overall, group revenues slumped by 20.7 per cent compared with its first three quarters last year, it said in a trading update.
Origin estimates that total autumn and winter cropping in Ireland and the UK at around 1.9 million hectares this year, 25.8 per cent lower than last year amid “persistent rainfall” during the winter months. As a consequence, spring and winter plantings are expected to 8.5 per cent lower than last year, resulting in lower volumes for Origin’s on-farm agronomy services business.
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Excluding its crop marketing business, group revenues declined by 21 per cent at Origin in the first three quarters of its financial year, largely due to price reductions of 29 per cent amid an ongoing “correction” in feed and fertiliser prices after a commodity prices spiked in 2022 following Russia’s invasion of Ukraine.
The group generated revenues of €669.1 million in the three months to the end of April, it said, down 9.8 per cent on last year as persistent bad weather delayed on-farm activities.
Origin’s Irish and UK agricultural inputs business, however, saw “strong volume growth” over the three-month period, “supported by lower global fertiliser raw material pricing”.
“While trading conditions have been particularly challenging through FY24, the strategic focus to diversify the group’s portfolio is demonstrating the resilience of our earnings base”, Origin said. It remains “well on track” to deliver its profit and cash generation targets for the 2022 to 2026 financial period, Origin said.
Looking ahead, Origin upgraded its full-year earnings per share (EPS) guidance to between 45 cent and 48 cent from a previous range of between 44 cent to 49 cent.
Analysts from Davy Stockbrokers, which acts as a nominated adviser to the group. said the upgraded outlook was “highly commendable in the context of exceptionally challenging on-farm conditions” and Origin’s shares are “materially undervalued”.
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