Origin Regulatory News (OGN)

Origin Enterprises plc

Q3 Trading Update

Full year guidance in adjusted diluted earnings per share* of between 64 and 68 cent

Dublin, London, 10 June 2022. Origin Enterprises plc ('Origin' or 'the Group'), the international Agri-Services group, providing specialist agronomy advice, crop inputs and digital agricultural solutions to farmers, growers, landscapers and amenity professionals, today issues its FY22 Trading Update for the three and nine months ended 30 April 2022.

Highlights and Outlook

· Strong performance in the seasonally important third quarter ('Q3') across all segments

· Group revenue increased 47.3% to €880.6 million in Q3 and 50.2% to €1,757.7 million in the year-to-date

· On an underlying basis, at constant currency, revenues increased by 45.4% in Q3 and by 46.4% year-to-date

· High crop prices continue to support strong on-farm sentiment, with crop establishment and weather conditions generally favourable across all three segments

· Increase in underlying volumes year-to-date of 2.3%, excluding crop marketing volumes, despite a decrease in Q3 of 8.8%

· Strong volume performance across the Group's seed and crop protection portfolios were offset by reduced fertiliser demand due to significantly higher raw material costs

· €40.0 million share buyback programme 96% complete

· As announced separately today, Chairman Rose Hynes to be succeeded by Gary Britton at the 2022 AGM

· Guidance for fully adjusted diluted earnings per share, excluding any impact of the on-going share buyback programme, for FY22 in the range of 64 to 68 cent

* Excluding any impact of the on-going share buyback programme 

Revenue Summary

Group revenue for Q3 and year-to-date, compared to the prior period is as follows:

Group Revenue - Q3

Group Revenue - YTD

Reported Group revenue was €880.6 million for Q3, an increase of 47.3% on the prior year (44.2% on a constant currency basis). While exceptional price volatility for both agricultural outputs and fertiliser persisted through Q3, the Group experienced strong trading conditions throughout the period with good crop establishment, generally favourable weather conditions and strong on-farm sentiment.

Group revenue for the nine-months ended 30 April 2022 was €1,757.7 million, an increase of 50.2% year-on-year on a reported basis (an increase of 46.2% on a constant currency basis). Excluding Crop Marketing, revenue in our Agronomy and Inputs businesses delivered constant currency growth of 49.6%, reflecting volume growth of 2.3%, pricing improvement of 47.5% and a reduction of 0.2% reflecting the impact of acquisitions and disposals. The Group saw strong crop protection and seed volume growth, offset by fertiliser demand reduction as a result of the exceptionally high fertiliser pricing environment.

Ireland and the UK recorded an overall reduction in underlying volumes in Q3 of 8.7% and an increase year-to-date of 0.4%.

Q3 saw encouraging volume performances across the Group's seed and crop protection portfolios, offset by reduced fertiliser volumes. This trading environment was supported by a positive planting profile, with good crop establishment and favourable weather conditions, despite the impact of price inflation.

Total autumn and winter plantings for principal crops are estimated to be 8.7% ahead of last year at 2.6 million hectares. The area of winter wheat is estimated to be up 6.7% to 1.8 million hectares (1.7 million hectares in FY21) and oil seed rape up 19.0% to 0.4 million hectares (0.3 million hectares in FY21). Total autumn, winter and spring plantings for the 2022 growing season are forecast to be 2.9% ahead of last year, at 4.4 million hectares.

Business-to-Business Agri-Inputs has recorded increased revenues year-to-date driven primarily by global raw material price inflation, partly offset by reduced levels of demand. The global fertiliser market has seen significant raw material price volatility over recent months, however the Group continues to navigate these supply chain and pricing pressures.

The Group's Amenity business has delivered a strong performance year-to-date, continuing the positive momentum from the first half of the year. The integration of Green-tech, the UK's leading manufacturer and distributor of landscaping, forestry and ground maintenance equipment, has progressed to plan and is performing ahead of expectations.

Digital Agricultural Services continues to develop the Group's capabilities in precision farming and digital agronomy. By the end of Q3 FY22, over 1.8 million (Q3 FY21: 1.6 million) active hectares were uploaded to the Group's platform. 

In Continental Europe, the strong first half performance as a result of early season demand saw Q3 moderate to a 6.1% increase in reported revenue to €201.8 million, resulting in a 22.9% increase year to date to €383.9 million. Continental Europe recorded an underlying volume decrease, excluding crop marketing volumes, of 9.7% in Q3 and an increase of 1.4% year-to-date. Strong volume performances in both Poland and Romania were offset by the significantly reduced agricultural activity levels in Ukraine due to the war.

In Poland, combined autumn, winter and spring plantings for the 2022 growing season are estimated to be in line with last year at 8.9 million hectares, with a 2.5% increase in spring plantings offsetting a corresponding reduction in autumn and winter crops. To date, there has been satisfactory establishment of planted crops, however a lack of rainfall during the key growing season may have a negative impact on yields. 

In Romania, the total sown area for autumn, winter and spring plantings is estimated to be 0.7% ahead of the prior year at 8.4 million hectares. Crop establishment has been satisfactory to date, with some localised concerns regarding lack of rainfall which could impact yield potential.

In Ukraine, activity levels have reduced sharply since the start of the war with the limited sale of last year's crop significantly impacting on-farm liquidity. The Group's top priority remains ensuring the safety and wellbeing of our colleagues and the continued de-risking of the balance sheet in Ukraine. The Group continues to closely monitor the situation on the ground and support the limited localised operations in areas away from conflict, overseen by the local team.

Latin America recorded an increase in underlying business volumes in Q3 of 14.9%, in the seasonally quieter second half with year-to-date underlying business volumes 60.4% ahead of the prior year. The volume development and underlying growth is driven by increases in the Group's core product range and a significant increase in controlled release fertiliser sales following the completion of the Group's new production facility in Minas Gerais in the second half of FY21.

The total cropping area dedicated to soya, Brazil's principal crop, has increased by approximately 3.5% on the prior year to 40.6 million hectares. However, despite the encouraging planting profile in the period, adverse weather conditions have resulted in the expected soya harvest reducing to 122.7 million tonnes from the 145.7 million tonnes initially forecasted. The harvest for maize, Brazil's secondary crop, is also expected to reduce to 23.7 million tonnes from the 29.0 million tonnes initially forecasted.

Share Buyback Programme

On 9 March 2022 the Group commenced a share buyback programme to repurchase up to €40.0 million of ordinary shares. The programme is progressing to plan and is currently 96% complete.

Current Trading and Full Year Outlook for FY22

The Group has continued to successfully navigate price volatility and supply chain disruptions across its markets, primarily resulting from the war in Ukraine and ongoing global energy, commodity and general inflationary pressures. The strong trading conditions experienced to date have continued into Q4 across all three segments.

The Group now expects to deliver increased growth in earnings year-on-year, with full year adjusted fully diluted earnings per share, excluding any impact of the on-going share buyback programme, in the range of 64 to 68 cent for FY22.

Preliminary Results for FY22 will be announced on 27 September 2022.

ENDS

This announcement contains inside information. The person responsible for arranging release of this announcement on behalf of Origin is Barbara Keane, Company Secretary & General Counsel.

Enquiries

About Origin Enterprises plc

Origin Enterprises plc is an international Agri-Services group, providing specialist agronomy advice, crop inputs and digital agricultural solutions to farmers, growers, landscapers and amenity professionals. The Group has leading market positions in Ireland, the United Kingdom, Brazil, Poland, Romania and Ukraine. Origin is listed on the Euronext Growth (Dublin) and AIM markets of the Irish and London Stock Exchanges.