Agricultural services group Origin increases profits despite cost pressures

Agri-services group Origin Enterprises has upgraded its earnings outlook despite “extraordinary price volatility” due to the war in Ukraine.

na trading update and earnings guidance for the year ended July 2022, the group said it expects to deliver higher fully adjusted diluted earnings per share of 49 to 57 cents this year.

The number excludes any impact from the ongoing €40 million share buyback program.

It is the third profit increase in a row since the beginning of March.

Last month, Origin announced in an unscheduled trading update that it expected gains in the 45-cent to 49-cent range.

Origin said in a statement Friday that it had seen “strong trading” across all three businesses.

Origin, under its Agrii brand, provides agricultural advice, supplies and digital solutions to arable, fruit and vegetable growers in the UK, Ireland, Brazil, Poland, Romania and Ukraine.

“The war in Ukraine and ongoing global energy and supply challenges have resulted in exceptional price volatility for both agricultural commodities and fertilizer commodities,” Origin said in a statement Friday.

“Continued strong agricultural sentiment and benign weather conditions in the key application window have helped us successfully manage this price volatility across segments.”

Goodbody analyst Jason Molins said Origin’s stock price is up 30 percent year-to-date, with the group’s structural outlook likely to improve as food security amid the war in Ukraine is on the agenda.

Davy analysts Roland French and Cathal Kenny said they would raise their earnings forecasts 10-11 percent as a result, and said the company has demonstrated “agility and strong inventory management” despite the volatile operating environment.

The Dublin and London-listed company will host a capital markets day in London on May 10 and release a third quarter trading update on June 15.

The group recently resumed limited local operations in Ukraine in non-conflict areas. It had ceased operations after the February 24 Russian invasion.

Origin has 13 regional offices and seven regional warehouses in Ukraine, totaling 20,000 square meters, two demonstration centers, chemical, seed and plant disease laboratories.

In its interim results in March, the group announced an increase in sales of 53.2 percent to 877.1 million euros in the six months to the end of January 2022.