Irish agri-services group Origin Enterprises has reported underlying growth in pre-tax profit of 7% to reach €70.3m for its 2018 financial year to the end of July. The group said the extreme weather experienced in the first half of 2018 led to higher sales volumes of animal feed and fertiliser, which drove the healthy growth in profits for the year.

Underlying operating profits increased almost 5% during the year to €71.2m, despite profit margins narrowing from 4.6% in 2017 to 4.4% for the 2018 financial year. Total group revenue for the year increased strongly by 9% to just over €1.6bn – again due to higher animal feed and fertiliser sales.

The business generated free cashflows of almost €57m during the year, which was a significant increase on the €32.5m in cashflows generated the previous year. The group’s net debt position at year end increased to €38.4m, however the business remains very lowly borrowed with a net debt to earnings (EBITDA) ratio of just 0.54 times.

2018 has been a hugely challenging year for crop growers and farmers but Origin has performed ahead of guidance on an earnings-per-share (EPS) basis

Speaking to the Irish Farmers Journal on Wednesday morning, Origin chief executive Tom O’Mahony said the 2018 performance underlined the “robustness” of the Origin business model.

“2018 has been a hugely challenging year for crop growers and farmers but Origin has performed ahead of guidance on an earnings-per-share (EPS) basis,” said O’Mahony.

On the back of the solid performance in 2018, Origin announced a total dividend payout to shareholders of 21c per share, which is in line with last year.

South American expansion

During the year, Origin made its first move into South America after it acquired a 65% stake in Brazilian company Fortgreen Commercial Agricol for €41.3m on a cash-free and debt-free basis.

Group chief executive Tom O’Mahony said Brazil is the world’s second-largest exporter of agricultural commodities, producing over 230m tonnes of crops every year, and this is the type of market Origin wanted to play in moving forward.

Origin announced on Wednesday it had appointed executive director Declan Giblin as chief executive for the group’s Latin America division, which comprises the new business in Brazil.