TIDMOGN
RNS Number : 7522C
Origin Enterprises Plc
15 June 2023
Origin Enterprises plc
Q3 Trading Update
Full year adjusted diluted EPS guidance of between 50.0 and 53.0
cent
Dublin, London, 15 June 2023 . Origin Enterprises plc ('Origin'
or 'the Group'), the international Agronomy-Services group,
providing specialist advice, inputs and digital solutions to
promote sustainable land use, today issues its FY23 Trading Update
for the three months ('Q3') and nine months ended 30 April
2023.
Highlights and Outlook
-- Our markets continue to exhibit significant price and volume
volatility, which requires close management. Guidance for fully
adjusted diluted earnings per share for FY23 is in the range of
50.0 to 53.0 cent, in line with market forecasts
-- Group revenue increased 9.3% (11.3% constant currency) to
over EUR1.92 billion year-to-date, despite Q3 revenue down 15.9%
(12.9% constant currency) year-on-year
-- Performance in Q3 was impacted by more cautious on farm
sentiment and poor northern hemisphere in-field conditions delaying
key crop input applications, however weather conditions and demand
have subsequently improved into Q4
-- Underlying volumes decreased 11.7% year-to-date, excluding
crop marketing volumes, driven by reductions in Ireland/UK and
Continental Europe of 13.2% and 14.2% respectively, partially
offset by a strong 37.5% i ncrease in Latin America
-- Continued strengthening of our offering in Amenity,
Environment and Ecology with the acquisitions of Keystone
Environmental, Neo Environmental, Agrigem and British Hardwood Tree
Nursery
-- Strong ESG progress with upgrades to external ESG ratings and
emissions targets (Scope 1 - Scope 3) submitted to SBTi for
validation during the year
-- Strengthening of Board and executive team with appointment of
Ms Pam Powell to the Board and Mark Webb as Managing Director of
the new Environmental and Ecology business division
-- EUR20 million share buyback programme completed, with strong balance sheet metrics maintained
Revenue Summary
Group revenue for year-to-date and Q3, compared to the prior
period, is as follows:
Group Revenue - YTD
Constant
Currency(2)
YTD FY23 YTD FY22 Variance Underlying(1) %
EUR'm EUR'm % %
-------------------- ------------ ---------- ------------ --------------- -------------
Ireland / UK 1,242.9 1,182.2 5.1% 7.1% 8.1%
Continental Europe 398.4 383.9 3.8% 5.8% 5.8%
Latin America 104.4 55.1 89.5% 70.2% 70.2%
Total Agronomy and
Inputs 1,745.7 1,621.2 7.7% 9.0% 9.6%
Crop Marketing 175.2 136.5 28.3% 31.0% 31.0%
Total Group 1,920.9 1,757.7 9.3% 10.7% 11.3%
(1) Excluding currency movements and
the contribution of acquisitions
(2) Excluding currency movements
------------------------------------------------------- --- --------------- -------------
Group Revenue - Q3
Constant
Currency(2)
Q3 FY23 Q3 FY22 Variance Underlying(1) %
EUR'm EUR'm % %
-------------------- ----------- --------- ------------ --------------- -------------
Ireland / UK 489.6 620.5 (21.2%) (19.4%) (18.0%)
Continental Europe 175.4 201.8 (13.0%) (11.2%) (11.2%)
Latin America 14.9 10.6 39.9% 65.8% 65.8%
Total Agronomy and
Inputs 679.9 832.9 (18.4%) (16.3%) (15.3%)
Crop Marketing 61.6 47.7 29.0% 30.2% 30.2%
Total Group 741.5 880.6 (15.9%) (13.8%) (12.9%)
(1) Excluding currency movements and
the contribution of acquisitions
(2) Excluding currency movements
----------------------------------------------------- --- --------------- -------------
Group revenue for the nine-months ended 30 April 2023 was
EUR1.92 billion, an increase of 9.3% year-on-year on a reported
basis and 11.3% on a constant currency basis. Excluding crop
marketing, revenue in the Agronomy and Inputs businesses delivered
constant currency growth of 9.6%, with price growth of 20.6%,
reflecting global commodity prices, and an increase of 0.7% from
acquisitions set against reduced volumes of 11.7%.
Reported Group revenue was EUR741.5 million for Q3, a reduction
of 15.9% on Q3 FY22 (12.9% on a constant currency basis). Wet and
cold weather in Q3 delayed on-farm activity and, combined with raw
material price volatility, resulted in reductions in both crop
protection and fertiliser volumes. LATAM's strong performance
continued into Q3, delivering a 65.8% increase in revenues on a
constant currency basis, of which volume growth was 47.4%.
Ireland and the UK reported a revenue increase of 5.1% to
EUR1.24 billion year-to-date, while Q3 saw a 21.2% reduction in
reported revenue to EUR489.6 million. On a year-to-date basis,
underlying volumes reduced by 13.2% (Q3: 21.0% reduction).
Q3 saw reduced volumes across all product categories, as
prolonged wet and cold weather in mid-to-late Q3 impacted in-field
activity. While weather conditions have subsequently improved,
positively impacting on-farm demand, some areas will experience a
shorter growing season.
The total autumn and winter cropping area is estimated to be
broadly unchanged on last year at 2.6 million hectares. Combined
autumn/winter and spring plantings for the 2023 crop production
year are expected to be marginally behind last year at 4.3 million
hectares.
Business-to-Business Agri-Inputs recorded reduced revenues
year-to-date. Volumes have been impacted by delayed purchasing
on-farm, primarily driven by delayed in-field activity due to wet
and cold conditions, in addition to pricing uncertainties
associated with significant raw material price volatility over
recent months. The Group continues to navigate these supply chain
challenges into Q4.
The Group's Amenity business delivered a good performance, with
increased revenues year-to-date. During the quarter the Group
announced the acquisition of Agrigem Limited ('Agrigem'). Agrigem
is the largest independent specialist supplier and advisor of
ground care products throughout the UK and Ireland. More recently,
the Group announced the acquisition of British Hardwood Tree
Nursery Limited ('BHT') , which further strengthens our product
range and broadens our offering in the Amenity space. BHT is one of
the UK's leading specialist wholesale suppliers of bare root trees,
shrubs, hedgerow plants and planting accessories for the forestry,
farming, estate management, corporate and landscaping sectors.
These acquisitions align with our strategy and further strengthen
the Group's amenity, environmental and ecological portfolio.
In May 2023, the Group appointed Mark Webb as Managing Director
of our newly established Environmental and Ecology division. Recent
acquisitions, Keystone Environmental and Neo Environmental, and any
future environmental and ecology acquisitions will form part of
this new division. Neo, which was acquired in the quarter, is a
multi-disciplinary consultancy business that provides
market-leading planning, environmental and technical advice to a
range of clients, primarily in the energy and infrastructure
sectors across the UK and Ireland.
In Continental Europe, reported revenue increased by 3.8% to
EUR398.4 million year-to-date, while Q3 saw a 13.0% reduction in
reported revenue to EUR175.4 million. Underlying volumes, excluding
crop marketing volumes, decreased 13.7% in Q3 and 14.2%
year-to-date. Early season on-farm purchasing decisions were a key
feature of the first half of the year, however adverse on-farm
conditions delayed the start to crop input applications, which have
negatively impacted Q3 and year-to-date volumes.
In Poland , crop establishment to date is good, with the total
cropping area for the 2023 growing season expected to be broadly
equivalent to last year at 8.9 million hectares.
In Romania , crop establishment has been satisfactory to date,
supported by generally favourable soil moisture levels. Combined
winter and spring plantings for the growing season are currently
forecasted to be in line with last year at 8.4 million
hectares.
In Ukraine, activity levels have reduced as a result of the war,
with the planted area expected to be significantly behind pre-war
levels, with a consequent impact on trading volumes. We continue to
support limited localised operations but our top priority continues
to be the safety and wellbeing of our colleagues in the region, and
we are actively monitoring the situation on the ground, overseen by
the local team.
Latin America recorded a 37.5% increase in underlying business
volumes year-to-date (47.4% increase in the seasonally quieter Q3
period). Year-to-date revenues were EUR104.4 million, a 70.2%
increase on a constant currency basis. Q3 revenue was EUR14.9
million, a 65.8% increase on a constant currency basis.
The strong volume development and underlying growth is enabled
by the broadening of our product range, following additional
investment to increase capacity of liquid, dry and controlled
release fertiliser. Further investment will be required during FY24
in controlled release fertiliser capacity to address current
production related constraints.
The total cropping area dedicated to soya, Brazil's principal
crop, is expected to increase by 5.1% on the prior year to 43.6
million hectares, with the expected soya harvest increasing to
153.3 million tonnes from 125.5 million tonnes last year. The total
production for Brazil's secondary crop, maize, is forecasted to
increase by 10.6% to 125.1 million tonnes.
Completion of Share Buyback Programme
On 28 September 2022 the Group commenced a share buyback
programme to repurchase up to EUR20 million of ordinary shares. The
programme was completed on 29 March 2023, with the average price
paid per share of EUR4.0583.
Current Trading and Full Year Outlook for FY23
The Group has had a good year-to-date performance, despite the
challenges presented by general pricing uncertainty and the impact
of delayed key crop input applications.
Increased on-farm activity and favourable growing conditions
have resulted in a positive start to Q4, and the Group expects to
deliver full year adjusted fully diluted earnings per share, in the
range of 50.0 to 53.0 cent for FY23, in line with market
forecasts.
Preliminary Results for FY23 will be announced on 26 September
2023.
ENDS
Enquiries
Origin Enterprises plc
TJ Kelly
Chief Financial Officer Tel: +353 (0)1 563 4900
Brendan Corcoran
Head of Investor Relations and Group
Planning Tel: +353 (0)1 563 4900
Goodbody (Euronext Growth (Dublin)
Adviser)
Joe Gill Tel: +353 (0)1 641 9278
Davy (Nominated Adviser)
Anthony Farrell Tel: +353 (0)1 614 9993
Numis Securities (Stockbroker)
+44 (0)20 7260
Stuart Skinner Tel: 1314
FTI Consulting (Communications Advisers)
Jonathan Neilan / Patrick Berkery +353 (0)86 602
/ Jack White Tel: 5988
About Origin Enterprises plc
Origin Enterprises plc is an international Agronomy-Services group, providing specialist advice,
inputs and digital solutions to promote sustainable land use. The Group has leading market
positions in Ireland, the United Kingdom, Brazil, Poland, Romania and Ukraine. Origin's ordinary
shares are listed on the Euronext Growth (Dublin) market of Euronext Dublin and the AIM market
of the London Stock Exchange.
Euronext Growth (Dublin) ticker symbol: OIZ
AIM ticker symbol: OGN
Website: www.originenterprises.com
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END
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