Agri-services group Origin Enterprises has reported a 4% increase in operating profits to €70m for its financial year to the end of July 2017, as profit margins widened 20 basis points to 4.6%. However, with currency movement stripped out, Origin saw a 12% increase in its underlying profits.
In results released on Wednesday morning, Origin said its business had benefitted from the more stable near-term planning environment for primary producers, particularly in the UK where the weak sterling had boosted farmgate cereal prices.
Origin reported a slight increase (+0.5%) in sales for the year to €1.53bn, while pre-tax profits increased 3% €67.5m. Origin’s net debt position at year end stood at €31.5m, meaning the group is very lowly geared with a net debt to earnings (EBITDA) ratio of just 0.49 times.
Speaking to the Irish Farmers Journal on Wednesday morning, Origin Enterprises chief executive Tom O’Mahony said the company had “significant headroom” to work within the terms of any future acquisitions or spending.
UK and Ireland
Origin’s business in the UK and Ireland saw revenues fall almost 7% to €955m for the 2017 financial year. Excluding the impact of currency, the business reported a 12% increase in underlying operating profits to €53.4m, with favourable demand leading to a near 5% increase in the volume of agronomy services and inputs provided to farmers.
The weaker sterling has boosted the farmgate price of grain for UK cereal growers, with O’Mahony describing the mood among UK growers as “optimistic”.
Origin’s continental Europe division, which includes its operations in Poland, Romania and Ukraine, reported a 24% increase in sales to €397.3m. Underlying operating profits increased 10% to €16m, despite margins shrinking 50 basis points to 4.1%,