The hit to UK autumn crop plantings from dismal weather left
the owner of the UK's Agrii agronomy chain swallowing a 59% drop in profits
from it agri-services operations, despite a "strong" performance in Poland.
Origin Enterprises, which at the start of last year
consolidated its UK agronomy businesses as Agrii, warned that the UK's "unprecedented
and challenging weather" last year had, by limiting fieldwork, cut farmer demand
for crop advice.
"Lower-year-on-year winter arable plantings [led] to
significantly curtailed in-field operations across our on-farm agronomy
services business," Tom O'Mahony, the chief executive of the Irish-based group,
Fertilizer sales also fell, with slow seeding progress
prompting growers to delay nutrient purchases until nearer the time of
Origin estimated UK winter wheat sowings down 20% year on
year, a drop equivalent to approaching 400,000 hectares, and winter oilseed
rape plantings falling 10%, which would be nearly 75,000 hectares.
Origin Enterprises' farm division had seen some compensation
from the bad weather in terms of "strong" sales of spring seed, now in demand
as farmers attempt to fill gaps in their seeding plans.
The group also flagged "strong spot demand for beef and
dairy feed rations", reflecting "limited availability of quality winter fodder
and domestic feed grains".
Nonetheless, operating profits in agri-services in the
August-to-January half fell to E2.39m, and would have fallen further, by 66% to
E2.0m, were it not for the contribution from acquisitions.
The decline in profits also defied a firm performance by the
group Polish agronomy operation, Dalgety Agra, which achieved "good organic
growth", helped by the impact of a better-than-expected harvest last year and "excellent"
weather soil conditions for autumn plantings.
Joint venture boost
Origin Enterprises relied on its tie-ups – Irish foods supplier
Veleo and fish protein business Welcon - for 27% growth to E8.19m in group
earnings for the period, equivalent to 7.59 euro cents per share.
"The strategic associate and joint venture investments
performed strongly in the period reflecting a positive output price environment
together with the benefits of improved integration and scale," Mr O'Mahony said.
And the group said that it was "comfortable" with market
expectations of full-year earnings of 48.5 euro cents per share despite the
poor start for its agriculture business.
The division was "well-positioned for the seasonally more
important second half of the year", expected to witness bumper spring plantings.
"Higher profits from our associates and joint ventures in
the current year are expected to offset any weather impact on our agri-services
business," Origin added.
The results were termed by Dublin-based broker NCB as in
line with expectations, with the drop in agriculture profits "well flagged".
"We don't expect there to be any significant changes to
consensus following these result," NCB analyst Darren Greenfield said.
Rival broker Davy kept an "outperform" rating on Origin
shares, which closed 4.0% lower at E4.80 in Dublin.