Origin Enterprises predicts year of growth

Origin Enterprises chief executive Tom O’Mahony expects the company to enjoy continued growth this year, driven by dairy sector expansion and via acquisitions outside of its core UK and Irish markets.

The agronomy group, which is majority owned by Swiss food group Aryzta, saw its revenues grow in the first half of its financial year to €531.6m, up by 2.7% versus the same period in the previous financial year. Analysts at Goodbody have retained their full-year “outperform” recommendation, despite pre-tax profits dipping by 8.7% from €8.33m to €7.6m, partly explained by the difficult Ukraine market.

The broker estimates that Origin’s stock is slightly undervalued at present, and predicts full-year earnings per share to exceed 61.1c.

Origin is also well-placed to capitalise on demand for its agronomy products, with the EU due to abolish milk quota restrictions on March 31.

“We spent the last two years scaling up our UK business,” Mr O’Mahony said. “We are a service company for crop growers, and we expect to continue building the company that way. We are always looking for growth opportunities beyond our core business, and we are looking at central and eastern Europe.

“The quota abolition is very positive. The intensification of dairy enterprises should see demand grow for fertiliser, feed, and other agronomy products; and Origin is all about soil quality.”

Mr O’Mahony said Ireland is the best-placed European country to leverage post-quota opportunities, as the EU state with the strongest focus on low cost, grass-fed, outdoor milk production.

Operating profit from the agri-services business of €4.1m was broadly in line with the previous period. Revenue from agri-services was €531.6m versus €517.6m in the previous period, an increase of 2.7%. On a like-for-like basis, revenues decreased by €27.9m (5.4%), reflecting a combination of lower feed and fertiliser prices, lower crop marketing volumes, and prices, partially offset by increased agronomy services and volumes for crop protection and fertiliser.

Origin had net debt of €161.2m, versus €163.6m for the same period in 2013. Origin also has a 32% shareholding in consumer foods company Valeo, whose brands include Erin, Squeeze, Batchelors, and Odlums. Origin said Valeo performed “satisfactorily” in the six-month period.


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