The seasonally quiet first half was broadly solid for agri-business Origin Enterprises (OGN). At 5.8¢ - down 2 per cent on last year - adjusted EPS came in slightly ahead of broker Goodbody's forecasts. That followed a favourable 2014 harvest and another strong year of winter wheat plantings in the UK and Poland, supporting demand for Origin's agronomy services.
However, trading conditions in Ukraine were "challenging", and management suggested this would continue into 2015. Farming sentiment in general is deteriorating as producers - dairy farmers in particular - are feeling the pinch of falling prices. That said, deflation only highlights the importance of efficient farming, based on the kind of sophisticated agri-services Origin offers. These include soil scanning, field sampling and special nutrient blends.
The sharp decline in reported pre-tax profit was due to lower earnings from Origin's stake in foods business Valeo. In the core agri-services division, like-for-like sales fell 5 per cent, reflecting lower feed and fertiliser prices and reduced crop marketing volumes and prices. However, operating profit grew by €1.1m (£0.78m) to €4.1m, helped by higher volumes of crop protection and fertiliser. The cropping profile to date is robust, so the outlook for the second half - which accounts for 90 per cent of full-year earnings - is decent. Management has retained its full-year EPS guidance of 60¢.
| ORIGIN ENTERPRISES (OGN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 853¢ | MARKET VALUE: | €1.1bn | |
| TOUCH: | 840-865¢ | 12-MONTH HIGH: | 883¢ | LOW: 736¢ |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 158¢* | NET DEBT: | 81% | |
| Half-year to 31 Jan | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 518 | 3.1 | 2.5 | 0 |
| 2015 | 532 | 1.7 | 1.6 | 0 |
| % change | +3 | -44 | -34 | - |
Ex-div: na Payment: na *Includes intangible assets of €156m, or 125¢ a share £1=€1.40 | ||||
