Origin shares rise as Q1 revenue grows 10%

AGRI-services group Origin Enterprises has delivered 10% underlying growth in revenue in the first quarter pushing shares ahead by 3.7% yesterday.

Yesterday Origin issued a trading update for the three months to October 29, 2011, in advance of its annual general meeting in The Westbury Hotel.

Group revenue was €315.8 million for the three months compared with €340.6m in the corresponding period last year.

The company said the decrease is attributable to the completion of the Valeo Foods transaction in November 2010 which transitioned Origin’s consumer foods interest from a wholly-owned business to an associate.

Origin shares closed at €3.20, up 11.5 cents or 3.7277%.

Davy Stockbrokers food analyst John O’Reilly said: “It has the financial clout to invest to maintain growth around core activities (non-core activities are a potential source of cash on sale). The share price is behaving as though activities are more strongly calibrated to commodity food prices than is in fact the case. The shares are outstanding value,” he said.

Goodbody’s Liam Igoe said last year’s acquisitions of UAP and Rigby Taylor will see integration benefits positively impacting the company’s full-year results.

“Origin will see a further increase in its seasonal mix in favour of H2 (approx 85% of profits will be in H212), due to the even more pronounced seasonality in these highly seasonal businesses. We will be leaving our forecasts unchanged following this statement and re-iterate our Buy recommendation on the stock,” he added.

Origin said integrated agronomy services performed very satisfactorily in the period benefiting from robust activity at farm level.

Management said the group remains comfortable with consensus market estimates for the full year.

“The current favourable planning environment for primary food producers is expected to support a positive backdrop to agri-services trading in 2012. The integration of United Agri Products, Carrs Fertilisers and Rigby Taylor is progressing to plan.

“The group remains firmly focused on enhancing its leadership position in the provision of sustainable crop management systems and smart agricultural technologies that meet the requirements of an increasingly professionalised and automated farming sector,” Origin said in the statement.