Origin Enterprises is “guiding full year financial year [FY] 2021 adjusted diluted earnings per share of between 34.0c and 36.0c, up from 25.69c in FY20”, despite “challenging spring conditions”, the agri-services firm has announced.
Origin issued its financial year 2021 trading update for the three and nine months ended April 30, 2021, this morning (Wednesday, June 16).
The group says it delivered a “satisfactory performance” for the seasonally important third quarter (Q3) considering the adverse impact of prolonged cold weather on farm activity.
Despite reasonably favourable autumn planting conditions, normal spring farm activity was held back by exceptionally cold conditions in April, which extended across the whole of Europe, the group noted, adding:
“Persistent cold spring weather and the absence of pest and disease prevalence in crops has resulted in lower input volumes in Q3 across our Ireland, UK and continental European markets.
“While overall business volumes are marginally positive year-to-date, this is set against a comparative period that encountered significant challenges with extreme weather conditions and the early stages of Covid-19,” it was added.
Origin noted that, since the period end, there has been a return to more settled weather conditions generally, across Ireland, the UK and continental Europe, which is driving a level of catch-up activity on farm.
As a result, the group expects an increase in demand for agronomy services, crop inputs and amenity products for the fourth quarter (Q4).
Reported group revenue was €597.8 million for Q3, a decrease of 1.2% on the prior year (an increase of 1.7% on a constant currency basis).
This, Origin says, primarily reflects the “impact of delayed in-field activities and on-farm crop input investment, following cold spring weather conditions across Ireland, the UK and continental Europe”.
Group revenue for the nine months ended April 30, 2021, was €1,170.2 million, a decline of 3.3% year-on-year on a reported basis (an increase of 0.8% on a constant currency basis).
Excluding crop marketing, revenue in the group’s agronomy and inputs businesses delivered constant currency revenue growth of 2.2%, reflecting volume growth of 1.6%, marginal pricing improvement of 0.2% and an acquisition contribution of 0.4% in its amenity business.
Ireland and the UK recorded a reduction in underlying agronomy services and crop input volumes in Q3 of 4.5% and an increase year-to-date of 2.4%.
Volume performance in the quarter was described as “challenging”, with the cold weather recorded across the UK resulting in delayed in-field activities and a reduced on-farm spend, despite a return to a more normalised cropping profile.
Total autumn and winter plantings for principal crops are estimated to be 42.6%, or 0.7 million hectares, ahead of last year at 2.4 million hectares. The area of winter wheat is estimated to be up 62.1% to 1.7 million hectares (1.0 million hectares in FY20).
Business-to-business agri-inputs recorded increased volumes year to date, as demand from trade customers was influenced by raw material price increases and concerns over product availability.
Volume momentum reduced in Q3 as cold weather conditions influenced demand, however full year volumes are expected to be ahead of FY20, it was added.
The group’s amenity business delivered an improved performance year-to-date, recording increased volumes benefitting from the easing of Covid-19 restrictions across the UK.
In March 2021, Origin acquired UK landscaping equipment firm Green-tech Limited, which the group says “strengthens Origin’s amenity business offering with potential in the area of environmental land management and biodiversity enhancement”.
The group’s digital platform continued to add increased functionality to farmers ahead of the FY21 growing season. By the end of Q3 FY21 over 1.6 million active hectares were uploaded to the platform.
Continental Europe recorded an underlying volume decrease in agronomy services and crop inputs (excluding crop marketing volumes) of 1.4% in Q3 and 3.2% year-to-date.