19th Jun 2018 09:08
LONDON (Alliance News) - Agricultural services group Origin Enterprises PLC said Tuesday that it put in a "robust" third-quarter performance despite a negative backdrop of "prolonged winter" leading to crop delays.
For the third quarter to April 30, revenue declined 4.0% to EUR526.7 million versus EUR548.7 million in the comparative period a year ago.
The Irish company blamed the decrease on the prolonged winter weather conditions, which resulted "in a delay to normal spring growth and crop maintenance activity".
In the UK and Ireland - Origin's core geographic division generating quarterly revenue of EUR338.3 million - like-for-like business volumes dropped 9.2% as a result of the delay to the start of in-field crop drilling, Origin said.
Within UK and Ireland, the Integrated On-Farm Agronomy Services business achieved lower revenue in the third quarter as volumes were hurt by "extremely cold weather".
Digital Agricultural Services performed well with the roll-out of the company's digital platform for agronomists and farmers Contour.
Business-to-Business Agri-Inputs performed "in line with expectations" in the third quarter following a satisfactory result in the first half of the year.
Because of the later Spring timing, Origin said the fourth quarter started well and "is expected to account for a greater proportion of full year revenue and profitability".
"Since the period end there has been a return to more normal and settled weather conditions, mainly in Ireland and the UK, which has underpinned a robust level of catch up activity on-farm to-date," Origin said.
The company issued full-year earnings guidance in adjusted diluted earnings per share of between 47.5 and 48.5 euro cents, up from 46.62 cents the year before.
In a separate announcement on Tuesday, Origin said it bought a 65% stake in Brazil-headquartered Fortgreen Commercial Agricola Ltda for EUR41.3 million in cash to make its entry in the Brazilian market.
An additional EUR9.0 million in cash will be payable within 12 months on the achievement of specific targets.
As part of the deal, Origin acquired a 20% stake in Ferrari Zagatto E Cia Ltda.
"Parana is a mature and strategically important agricultural region in Brazil comprised of well-established and well-capitalised mid-sized farm holdings," Origin said.
"In terms of primary crop production, the region benefits from favourable climate, highly productive soils and competitive logistical advantages as a result of having good-quality infrastructure and being close to sea ports."
Origin has agreed a put and call option to acquire the remaining 35% of Fortgreen on specified dates. Separately, it has been granted an option to purchase an additional 40% interest in Ferrari in 2020.
The acquisition was funded entirely from existing bank facilities and is expected to be "earnings enhancing" from the first year of ownership.
Origin Enterprises shares were untraded at EUR5.72 on Tuesday.
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