Origin revenues down 5.5%, a ‘slower start’ to 2016

Origin Enterprises plc, the agri-services group, has reported a slower start to the 2016 financial year with revenues down 5.5% on the corresponding period in 2014.

Revenue was €300.4m for the three months compared with €318.0m in the corresponding period last year.

Performance in the period is largely attributable to delayed new season activity on farm during August and September as weather interruption slowed the 2015 harvest, according to Origin.

This resulted in the later timing of service and input application in respect of this season’s winter crop planting programmes, it stated.

Origin stated that new season activity levels on farm were robust in the latter part of the period with strong winter crop planting progress achieved during October.

The total sown area for the principal winter crops is broadly equivalent to last year across the majority of the Group’s markets.

Origin expects the generally weaker output price backdrop and the associated cash flow pressure on farm to result in more concentrated purchasing patterns by primary producers.

Accordingly, farmer decision making on crop investment spend will likely occur closer to the main application, Origin has stated and usage periods in the second half of the financial year when in excess of 90% of the Group’s earnings typically arise.

Fertiliser consumption in Ireland was in line with the comparative period with primary dairy producers investing in nutrition programmes prior to the end of the grass growing season, according to the Group.

Outlook

The weaker market backdrop for primary producers and the associated pressures on farm incomes makes for a particularly challenging backdrop for service and input demand in 2016, Origin announced.

Origin anticipates an increased level of seasonality in the second half of the financial year reflecting more concentrated purchasing patterns by primary producers.

The current autumn cropping profile provides a strong foundation for the seasonally more important second half when in excess of 90% of earnings typically arise, the Group stated.

The Group expects to achieve full year adjusted diluted earnings per share of between 51c and 53c.

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