Shares in Irish agri firm Origin fall 8% on profit warning

Shares in Irish agri firm Origin fall 8% on profit warning

Irish agri-services group Origin Enterprises has warned that its full-year profits will be “significantly” short of target.

The company’s latest profit warning — essentially its second in three months — sent its shares plummeting by more than 8%.

Origin’s shares took a hit in late November when it said operating profits for the 12 months to the end of July would likely be negatively impacted by prolonged poor weather conditions, particularly in the UK.

The company is active in Ireland, the UK, eastern Europe and South America.

At that time, Origin estimated that higher-yielding winter crop in the UK would be down by 25%, year-on-year, due to heavy rainfall.

However, now — on the back of the wettest UK winter in 30 years — Origin expects its winter crop to be down by 40%.

“It is expected that group operating profit and adjusted earnings per share, for the full year, will now be significantly below the current range of analysts’ estimates,” Origin said.

Davy said it will lower its full year operating profit and earnings per share forecasts for Origin by around 20%. Goodbody said it will reduce its earnings per share outlook for Origin from 49.5c to 39c on the back of the latest update from the company.

“Given the level of rainfall since the company’s last update in November, the update is not entirely surprising,” said Goodbody analyst Jason Molins.

“While noting the longer-term growth opportunity for the group and attractive valuation, we are cautious on Origin in the near term, reflecting the lack of visibility for earnings due to the extremely challenging weather conditions currently being experienced,” he said.

Origin is set to report half-year figures, for the six months to the end of January, next week.

In its operations in continental Europe, the group said it anticipates operating profit to grow year-on-year, adding the Latin American division has seen a good start to the year.

Operating profit in Latin America is expected to show growth for the full year.

However, next week’s interim results won’t include specific full-year guidance, which won’t be forthcoming until Origin’s third quarter trading update in June.

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