Origin Enterprises reports ‘slower start’ to financial year
Irish-based International agronomy and agri-services group Origin Enterprises is reporting a “slower start” to trading in the first quarter (Q1) of the current financial year (FY20).
The group’s revenue stood at €371.2 million for the first three months of FY20, compared to the €430 million that was taken in during the same period of last year, equating to a decrease of 13.7%.
On an underlying basis, at constant currency, revenue declined by €61.9 million (14.4%), reflecting an underlying volume reduction of 22% in sales of seeds, crop protection products and fertiliser in this quarter.
Origin cites “prolonged unseasonable weather conditions” as a major factor in the reduced sales volume, due to lower planted area for autumn and winter crops, relative to a normal year. This has principally affected the business’ operations in the UK and Romania.
The reduced level of autumn plantings, and anticipated higher level of spring plantings, is likely to negatively impact the group’s operating profit for FY20.
In Ireland and the UK, Origin recorded a reduction in underlying agronomy services and crop input volumes of 24.1% in the period, due to “highly challenging” operating conditions for farmers following high rain-fall levels.
The total autumn/winter cereal and oil seed rape planted area is set to be 25% lower than last year, at 2.1 million hectares. The majority of this area is expected to transfer into spring cropping.
However, business-to-business agri-inputs had a “satisfactory start” to the financial year, despite lower volumes of sales compared to the same quarter last year.
On continental Europe, there was an underlying volume reduction of 17.9% in the period.
There was good starts to the financial year in Poland and Ukraine, while trading in Romania was slower. The group’s Belgian fertiliser business performed in line with expectations.
In Latin America, momentum “continues to build”, according to Origin.
In terms of the group’s outlook, there is likely to be a higher concentration of sales demand in the second half of the financial year, though profit is likely to be lower by current analysts.