Company Announcements

 

 Origin Enterprises plc

 

PRELIMINARY RESULTS STATEMENT

 

Full year adjusted EPS of 71.53 cent ahead of expectation

Strong operational performance in exceptionally volatile trading environment

 

Dublin, London, 27 September 2022: Origin Enterprises plc ('Origin' or 'the Group'), the international Agronomy-Services group, providing specialist advice, inputs and digital solutions to promote sustainable land use, today announces its full year results for the year ended 31 July 2022 ('FY22').

 

Results Summary	2022 €'000	2021 €'000	Change %	Constant Currency %
Group revenue	2,342,102	1,658,367	41.2%	38.0%
Operating profit1	119,740	61,007	96.3%	89.7%
Associates and joint venture2	6,845	2,841	140.9%	134.0%
Total group operating profit1	126,585	63,848	98.3%	91.6%
Finance expense, net	(11,057)	(8,552)	29.3%	24.5%
Profit before tax1	115,528	55,296	108.9%	102.0%
Basic EPS (cent)	65.40	30.44	114.8%	106.4%
Adjusted diluted EPS (cent)3
- Excluding impact of buyback	69.62c	35.50c	96.1%	89.3%
- Including impact of buyback	71.53c	35.50c	101.5%	94.7%
Return on capital employed (%)	18.3%	9.3%	900bps
Group net cash/(bank debt)4 (€'000)	43,434	(14,406)	57,840
Operating margin1 (%)	5.1%	3.7%	140bps
Free cash flow (€'000)	108,489	49,168	59,321
Dividend per ordinary share (cent)	16.00c	11.00c	5.00c

 

Financial Highlights

 

·    Group revenue increase of 41.2% to €2.3 billion, primarily reflecting commodity price growth

·    Operating profit1 of €119.7 million, up 96.3% delivering an operating margin of 5.1% (FY21: 3.7%)

·    Adjusted diluted earnings per share3 of 71.53 cent (FY21: 35.50 cent)

·   Strong cash generation and conversion with free cash flow of €108.5 million (FY21: €49.2 million) and year end net cash4 position of €43.4 million

·    Proposed final dividend of 12.85 cent per share with total FY22 dividend of 16.00 cent

·    Completion of €40.0 million share buyback programme at average price of €3.97 per share

·    Launch of new share buyback programme of up to €20.0 million

 

Operational and Strategic Highlights

 

·  Generally very good conditions during the key planting and application periods in all markets provided a favourable backdrop for the business and allowed the Group to successfully navigate exceptional price volatility across its markets

·   Strong volume performance across the Group's seed and crop protection portfolios were offset by reduced fertiliser demand due to significantly higher raw materials pricing

·    Completion of the first phase of Cork property disposals, generating cash flow of €19.5 million

·   Key medium-term strategic, financial, operational and ESG objectives launched at recent Capital Markets Day

 

Commenting on FY22 performance, Origin's Chief Executive Officer, Sean Coyle said:

"FY22 saw strong agricultural commodity price growth and volatile trading conditions across all of the Group's three segments throughout the financial year. Despite these challenges, Origin delivered significantly improved financial returns and a strong operating performance supported by favourable conditions across all markets in the key planting and application periods of the year, in contrast to the previous two years, which were impacted by extreme weather and COVID-19.

 

The war in Ukraine and ongoing global energy and supply disruptions have resulted in exceptional price volatility for feed and fertiliser raw materials. Strong on-farm sentiment, bolstered by high crop prices, supported the Group in successfully navigating this price volatility across each segment.

 

The Group delivered strong increases in revenue, operating profit and EPS.  Return on capital employed also grew to 18.3%, driven by the improved earnings performance. The Group also delivered strong free cash flow of €108.5 million including a working capital inflow of €16.2 million. Our net cash position of €43.4 million at year end, compares to a net debt position of €14.4 million in FY21. This strong net cash position reflects the impact of certain one-off items but was also delivered on top of the return of €40.0 million to shareholders during the year through our share buyback programme.

 

Following an interim dividend of 3.15 cent, the Board is proposing a final dividend of 12.85 cent per share; a total dividend payment per share of 16.00 cent. Following on from the €40.0 million share buyback programme in FY22, and consistent with our objectives outlined at the Capital Markets Day, we intend to return a further €20.0 million by way of share buyback launching on 28 September 2022 and which may continue until 31 March 2023.

 

During the year, we set out our key medium-term strategic, financial, operational and ESG objectives at our Capital Markets Day. Our FY22 results represent a strong foundation from which to achieve these targets.

 

In June 2022, the Group announced that Gary Britton was appointed Chair Designate to succeed Rose Hynes at the 2022 AGM. On behalf of the Origin management team, I sincerely thank Rose for her contribution to the Group during her tenure as Chairman, wish her well in her future endeavours and look forward to working with Gary to drive the next phase of growth and development of the business.

 

Current Trading and Outlook

 

FY22 was characterised by several challenging macro-economic factors, including significant inflation, increasing energy costs and disrupted supply chains, which led to an exceptionally volatile trading environment. While these conditions are likely to persist, with the Group's strong balance sheet, market positions, deep customer relationships, access to diverse sources of product supply, and established routes to market, Origin is well positioned to deliver the financial, strategic and ESG objectives as outlined in the recent Capital Markets Day.

 

Consistent with previous years, the Group will issue a Q1 Trading Update for FY23 on the date of the AGM, 22 November 2022.

 

ENDS

 

 

1	Before amortisation of non-ERP intangible assets and exceptional items
2	Profit after interest and tax before exceptional items
3	Before amortisation of non-ERP intangible assets, net of related deferred tax (2022: €13.0m, 2021: €8.6m) and exceptional items, net of tax (2022: credit of €2.8m, 2021: credit of €1.2m)
4	Group net bank debt before impact of IFRS 16 Leases

 

Conference Call and Webcast details:

 

The management team will host a live conference call and webcast, for analysts and institutional investors today, 27 September 2022, at 08:30 (Irish/UK time). Registration details for the Conference Call and Webcast can be accessed at: www.originenterprises.com

 

Alternatively, please contact FTI Consulting by email at originenterprises@fticonsulting.com

 

Participants are requested to dial in 5 to 10 minutes prior to the scheduled start time.

 

 

 

Enquiries:
Origin Enterprises plc
TJ Kelly
Chief Financial Officer		Tel:  +353 (0)1 563 4959
Brendan Corcoran
Head of Investor Relations		Tel:  +353 (0)1 563 4900
Goodbody (Euronext Growth (Dublin) Adviser) Joe Gill		Tel:  +353 (0)1 641 9449
Davy (Nominated Adviser)
Anthony Farrell		Tel:  +353 (0)1 614 9993
Numis Securities (Stockbroker)
Stuart Skinner		Tel:  +44 (0)20 7260 1314
FTI Consulting (Financial Communications Advisers)
Jonathan Neilan / Patrick Berkery		Tel:  +353 (86) 602 5988

 

 

About Origin Enterprises plc
Origin Enterprises plc is an international Agronomy-Services group, providing specialist advice, inputs, services and digital solutions to promote sustainable land use. The Group has leading market positions in Ireland, the United Kingdom, Brazil, Poland, Romania and Ukraine. Origin is listed on the Euronext Growth (Dublin) and AIM markets of the Irish and London Stock Exchanges.
Euronext Growth (Dublin) ticker symbol:	OIZ
AIM ticker symbol:	OGN
Website:	www.originenterprises.com

 

Financial Review - Summary

 

	2022 €'000		2021 €'000
Group revenue	2,342,102		1,658,367
Operating profit1	119,740		61,007
Associates and joint venture, net2	6,845		2,841
Group operating profit1	126,585		63,848
Finance costs, net	(11,057)		(8,552)
Profit before tax1	115,528		55,296
Income tax	(25,509)		(9,657)
Adjusted net profit	90,019		45,639
Adjusted diluted EPS (cent)3
- Excluding the impact of buyback	69.62c		35.50c
- Including the impact of buyback	71.53c		35.50c
Adjusted net profit reconciliation
Reported net profit	79,899		38,232
Amortisation of non-ERP intangible assets	15,236		8,577
Tax on amortisation of non-ERP related intangible assets	(2,269)		55
Exceptional items (net of tax)	(2,847)		(1,225)
Adjusted net profit	90,019		45,639
Adjusted diluted EPS (cent)3
- Excluding the impact of buyback	69.62c		35.50c
- Including the impact of buyback	71.53c		35.50c
Operating margin1	5.1%		3.7%
Return on capital employed	18.3%		9.3%
Free cash flow	€108.5m		€49.2m

 

Adjusted diluted earnings per share³ increased by 101.5% to 71.53 cent. On a constant currency basis, adjusted diluted earnings per share increased by 94.7% when compared to the prior year.

 

 

Group revenue

 

Group revenue increased by 41.2% from €1,658.4 million in the prior year to €2,342.1 million. On an underlying basis revenue increased by 38.6%, driven by the exceptionally high fertiliser raw material pricing environment offset by reduced fertiliser demand and strong growth in both crop protection and seed volumes.

 

The underlying reduction in agronomy services and crop input volumes, excluding crop marketing volumes, was 5.4% for FY22.

 

 

Operating profit¹

 

Operating profit¹ increased by 96.3% to €119.7 million compared to €61.0 million in the previous year. On an underlying basis, operating profit¹ increased by €54.0 million (88.5%), driven by strong contributions across all three segments.

 

Group operating margin increased from 3.7% to 5.1% in FY22. This was principally driven by the Ireland and UK segment, which saw its operating margin increase from 3.7% in FY21 to 5.9% in FY22.

 

 

Associates and joint venture²

 

Origin's share of the profit after taxation from associates and joint venture amounted to €6.8 million in the period (2021: €2.8 million). This performance benefitted from exceptional operating and trading conditions and is set against a challenging prior year, which was impacted by a facility fire in our animal feed business R&H Hall, at the Port of Cork, Ireland and shipping challenges.

 

 

Finance costs and net bank debt⁴

 

Net cash⁴ at 31 July 2022 was €43.4 million (net debt⁴ of €5.1 million including IFRS 16 lease debt) compared to net bank debt⁴ of €14.4 million (€60.5 million including IFRS 16 lease debt) at the end of the prior year, an improvement of €57.8 million. The movement is primarily driven by the strong FY22 operating performance and a net working capital inflow in the year.  

 

Net finance costs amounted to €11.1 million, which represents an increase of €2.5 million on the prior year. Excluding the impact of IFRS 16, there was an increase in net finance costs of €2.4 million reflecting increased interest rates, year-on-year, across the Group.

 

At 31 July 2022, the Group had unsecured committed banking facilities of €400.0 million (2021: €430.0 million), with pricing linked to ESG performance, of which €33.8 million will expire in 2024 and €366.2 million in 2026.

 

At year end the Group's key banking covenants were as follows:

 

	Banking Covenant	2022	2021
Net debt to EBITDA	Maximum 3.5	-	0.13
EBITDA to net interest	Minimum 3.0	13.83	10.36

 

 

Working capital

 

For the year ended 31 July 2022, there was a working capital inflow of €16.2 million. Improvements in the mix of cash versus credit sales and certain one-off items were partly offset by an underlying working capital outflow due to higher commodity prices. The year end working capital position includes the net impact of trade payables which have been suspended in accordance with international sanctions imposed by authorities in response to the Russian invasion of Ukraine in 2022 of approximately €40.0 million. We continue to closely monitor the situation with regard to sanctions and act accordingly. Excluding the impact of suspended payments, the Group would have had a modest net bank debt⁴ position at year end. The year end represents the low point in the working capital cycle for the Group reflecting the seasonality of the business. 

 

Adjusted diluted earnings per share ('EPS')³

 

Adjusted diluted EPS³ amounted to 71.53 cent per share, an increase of 101.5% from FY21. This was driven by an increase in like-for-like underlying profits of 87.6%, the positive impact of acquisitions, foreign currency translation and share buyback programme of 3.8%, 6.8% and 5.4% respectively and a reduction of 2.1% as a result of disposals. Excluding the impact of the completed €40.0 million share buyback into account, the adjusted diluted earnings per share is 69.62 cent.

 

 

Free cash flow

	2022 €'m	2021 €'m
Free cash flow	108.5	49.2
Free cash flow conversion ratio	130.5%	114.9%

The Group generated free cash flow in the year of €108.5 million (2021: €49.2 million).

 

Free cash flow means the total of earnings before interest, tax, depreciation (excluding depreciation of IFRS 16 Right of Use leased assets), amortisation of non-ERP related intangible assets and exceptional items of wholly owned businesses ('EBITDA') adjusted to take account of interest, tax, routine capital expenditure, working capital cash flows and dividends received.

 

Free cash flow conversion ratio means free cash flow as a percentage of profit after tax of wholly owned businesses, excluding exceptional items and amortisation of non-ERP related intangible assets.

 

 

Return on capital employed

	2022	2021
Return on capital employed	18.3%	9.3%

 

Return on capital employed is a key performance indicator for the Group and represents Group earnings before interest, tax and amortisation of non-ERP related intangible assets from continuing operations ('EBITA') taken as a percentage of the Group Net Assets. For the purposes of this calculation:

 

(i)	EBITA includes the net profit contribution from associates and joint venture (after interest and tax) and excludes the impact of exceptional and non-recurring items; and
(ii)	Group Net Assets means total assets less total liabilities as shown in the annual report excluding net debt, derivative financial instruments, put option liabilities, accumulated amortisation of non-ERP related intangible assets and taxation related balances. Net Assets are also adjusted to reflect the average level of acquisition investment spend and the average level of working capital for the accounting period.

 

 

Exceptional items

 

Exceptional items net of tax amounted to a credit of €2.8 million in the year (FY21: credit of €1.2 million). These principally relate to the disposal of investment properties and are summarised in the table below:

 

 

Exceptional items	2022 €'m		2021 €'m
Gain on the disposal of investment properties	(2.7)		-
Gain on disposal of Belgian fertiliser business	-		(2.6)
Pension and rationalisation related costs	-		0.7
Arising in associates and joint venture	-		0.4
Transaction, other related costs and movements in contingent consideration, net	-		0.3
Other	(0.1)		-
Total exceptional items, net of tax	(2.8)		(1.2)

Dividends

 

The Directors are proposing a final dividend of 12.85 cent per ordinary share for approval at the AGM in November 2022, bringing the total dividend payment to 16.00 cent. Subject to shareholder approval at the AGM, this final dividend will be paid on 6 February 2023 to shareholders on the register on 13 January 2023.

 

 

Share buyback programme

 

On 9 March 2022 the Group commenced a share buyback programme to repurchase up to €40.0 million of ordinary shares. The programme completed on 8 July 2022 with 10,086,258 shares purchased at average price of €3.97. 1,084,797 shares were cancelled from Treasury shares on 29 July 2022 and further cancellations will be put into effect in due course.

 

The Group intends to launch another share buyback programme of up to €20.0 million. The buyback programme will commence on 28 September 2022 and may continue until 31 March 2023 subject to shareholder approval of a renewed repurchase authority at the 2022 AGM, market conditions, the ongoing capital requirements of the business and termination provisions customary for arrangements of this nature. The purpose of the share buyback programme is to reduce the share capital of the Company and the repurchased Ordinary Shares will be held in treasury pending their cancellation or re-issue in due course.

 

 

Sustainability

 

During the year we progressed our long-term Nurturing Growth sustainability strategy, with the development of Key Performance Indicators (KPIs) for our People Strategy, focused on Health and Safety, Diversity, and Inclusion.

 

Supporting the transition to more sustainable land use, we continued to adopt a strategic approach to reduce our environmental footprint and support our customers to do the same. To advance our efforts, we commenced the development of a formal Environmental Management System aligned to the ISO14001 standard and accelerated our work in the development of science-based Greenhouse Gas (GHG) reduction targets which we aim to submit for verification by the Science-Based Targets Initiative (SBTi) in 2023.

 

In line with Taskforce on Climate-related Financial Disclosures ('TCFD') we continue to consider climate related risks and opportunities within our business model.

 

Investor relations

 

Our strategy aims to create long-term shareholder value and we support this strategy through regular and open communication with all capital market participants.

 

Contact with institutional shareholders is the responsibility of the executive management team including the Chief Executive Officer, the Chief Financial Officer and the Head of Investor Relations.

 

We engage with institutional investors in numerous one-on-one meetings, as well as at roadshows and equity conferences. During FY2022, meetings were held with 174 institutional investors. Engagement was facilitated through a combination of in-person meeting and remotely using virtual conferences and video calls.

 

In May 2022 Origin hosted a Capital Markets Day in London, to set out the Group's key medium-term strategic, financial, operational and ESG objectives. The event attracted a strong in-person attendance of analysts, shareholders and institutional investors, in addition to a large number of participants joining via the live broadcast on Origin's website.

 

Details of Origin's Capital Markets Day 2022 including the presentation and webcast replay are available on the investor relations section of the website https://originenterprises.com/capital-markets-day-2022

 

 

Annual General Meeting (AGM)

 

The AGM is scheduled to be held on 22 November 2022 at 11.00am (UK/Ireland time) in the Merrion Hotel, Upper Merrion Street, Dublin 2.

 

1	Before amortisation of non-ERP intangible assets and exceptional items
2	Profit after interest and tax before exceptional items
3	Before amortisation of non-ERP intangible assets, net of related deferred tax (2022: €13.0m, 2021: €8.6m) and exceptional items, net of tax (2022: credit of €2.8m, 2021: credit of €1.2m)
4	Group net bank debt before impact of IFRS 16 Leases

 

 

Review of Operations

Group Overview

 

			Change on prior year
	2022 €'m	2021 €'m	Change %	Underlying3 %	Constant Currency4  %
Revenue	2,342.1	1,658.4	41.2%	38.6%	38.0%
Operating profit1	119.7	61.0	96.3%	88.5%	89.7%
Operating margin1	5.1%	3.7%	140bps	130bps	140bps
Adjusted diluted EPS (cent)2	71.53	35.50	101.5%	87.6%	94.7%

 

 

1	Before amortisation of non-ERP intangible assets and exceptional items
2	Before amortisation of non-ERP intangible assets, net of related deferred tax (2022: €13.0m, 2021: €8.6m) and exceptional items, net of tax (2022: credit of €2.8m, 2021: credit of €1.2m)
3	Excluding currency movements and the impact of acquisitions and disposals (and for EPS excluding impact of buyback)
4	Excluding currency movements

 

FY22 was a strong year for Origin with increases in Group revenue, operating profit and adjusted fully diluted earnings per share of 38.0%, 89.7% and 94.7% respectively on a constant currency basis. Operating margin increased to 5.1% in FY22 from 3.7% in FY21, primarily attributable to strong contributions from all three segments.

 

There was an underlying decrease in agronomy services and crop input volumes, excluding crop marketing volumes, of 5.4% for FY22.

 

 

Ireland and the United Kingdom

 

			Change on prior year
	2022 €'m	2021 €'m	Change %	Underlying3 %	Constant Currency4 %
Revenue	1,614.4	1,049.3	53.9%	47.0%	48.7%
Operating profit1	94.5	39.1	141.4%	125.8%	131.3%
Operating margin1	5.9%	3.7%	220bps	200bps	210bps
Associates and joint venture2	6.8	2.8	140.9%	134.0%	134.0%

 

 

1	Before amortisation of non-ERP intangible assets and exceptional items
2	Profit after interest and tax before exceptional items
3	Excluding currency movements and the impact of acquisitions
4	Excluding currency movements

 

Ireland and the UK delivered an improved performance in FY22 compared to the prior year, delivering an increase in underlying revenue of 47.0%, while underlying operating profit increased 125.8%.

 

There was an underlying volume reduction for agronomy services and crop inputs of 7.3% in the period. While raw material price inflation was the primary driver of revenue growth, it negatively impacted fertiliser volumes during the year. The reduction in fertiliser volumes of 22.6% was partially offset by a strong volume performance across our seed and crop protection portfolios.

 

FY22's performance was supported by strong on-farm sentiment and a positive trading environment, set against the backdrop of a significantly better crop mix at planting, excellent crop establishment and ideal application and growing conditions. Despite the extremely dry weather conditions experienced in Q4, to date the overall harvest has been strong.

 

Operating margin increased to 5.9% from 3.7% driven by management of the exceptional raw material pricing volatility in the market and a higher intensity of crop input spend by farmers and growers, influenced by strong output prices and favourable weather.

 

 

Integrated Agronomy and On-Farm Services

 

Integrated Agronomy and On-Farm Services delivered an improved result during the year, recording higher seed and crop protection volumes, revenues and margins.

 

The contribution was supported by a positive trading environment, despite the impact of price inflation, as a result of the strong planting profile, with good crop establishment and favourable weather conditions. Given the dry conditions in Q4, the harvest progressed at pace with strong yields and quality widely reported.

 

During the year, the Group enhanced its near market R&D capabilities with the acquisition of Envirofield Limited in the UK, an expert independent field-trials company specialising in agricultural and environmental research. The integration of Envirofield Limited is progressing to plan and is performing to expectations.

 

 

Digital Agricultural Services

 

The development and roll-out of Origin's digital offering continued during the year, with over 1.8 million (FY21: 1.7 million) active hectares on the platform.

 

Digital Agricultural Services continues to develop the Group's capabilities in precision farming and digital agronomy. The Group continues to work on in-house developments and foster external collaborative partnerships to build its capabilities. During the year, the Group partnered with Aspia Space to launch ClearSky, a world-first service with an aim to revolutionise the way satellite imagery is used in precision agriculture by farmers.  The priority for RHIZA, the Group's digital agronomy and precision farming operation, is strengthening in-field insights and decision-making, enhancing user functionality, and aligning Group technology to core business operations.

 

 

Business-to-Business Agri-Inputs

 

Our Business-to-Business Agri-Inputs division had a strong financial year, recording an overall improved contribution, despite reduced demand as a result of global raw material inflation during the year.

 

 

Fertiliser

 

Fertiliser delivered a strong financial and operating performance in FY22, despite the exceptional inflationary environment for global fertiliser prices in the year, as a result of increased global raw material prices and supply chain challenges. The global fertiliser market saw significant raw material price volatility through the year, however the Group continues to successfully navigate these supply chain and pricing pressures.

 

In addition to ensuring product availability for the important seasonal application period, the Group continues to focus on growing its speciality and bespoke soil health and nutrition product ranges. With high energy prices and general inflationary and supply chain challenges persisting, we expect product availability and pricing to remain a key challenge into FY23.

 

 

Amenity

 

The Group's Amenity business delivered a strong performance in the period, continuing the positive momentum of FY21.

 

The integration of Green-tech, the UK's leading distributor of landscaping, forestry and ground maintenance equipment, is complete and it is performing ahead of expectations.

 

 

Feed Ingredients

 

Origin's Feed Ingredients division reported an improved performance in FY22, achieved in an inflationary environment and follows the challenging trading and operating environment experienced in FY21.

 

The Group's animal feed manufacturing associate, John Thompson & Sons Limited, in which the Group has a 50% shareholding, delivered a strong performance in the period.

 

Continental Europe¹

 

			Change on prior year
	2022 €'m	2021 €'m	Change %	Underlying3 %	Constant Currency4 %
Revenue	461.8	415.7	11.1%	18.4%	11.6%
Operating profit2	14.8	15.7	(5.3%)	9.6%	0.4%
Operating margin2	3.2%	3.8%	(60bps)	(30bps)	(40bps)

 

1	Excluding crop marketing. While crop marketing has a significant impact on revenue, its impact on operating profit is insignificant. For the year ending 31 July 2022 crop marketing revenues and profits attributable to Continental Europe amounted to €192.7 million and €0.8 million respectively (2021: €154.4 million and a loss of €0.1 million respectively).  An analysis of revenues, profits and margins attributable to agronomy services and inputs more accurately reflects the underlying drivers of business performance
2	Before amortisation of non-ERP intangible assets and exceptional items
3	Excluding currency movements and the impact of acquisitions and disposals
4	Excluding currency movements

 

Continental Europe ('CE') delivered a strong underlying performance in Poland and Romania in FY22, with the overall result impacted by a reported loss in Ukraine as consequence of the Russian invasion in February 2022. CE's underlying business volumes reduced by 5.4% as fertiliser volumes reduced by 11.3%, in the period, with overall volume increases in Poland and Romania offset by reductions in Ukraine. Excluding Ukraine, overall volumes increased by 6.9%. Operating margin in FY22 for CE was 3.2% (FY21: 3.8%).  

 

The war in Ukraine is having a profound impact on agriculture in the region. 30% of arable land is estimated to be in either Russian occupied regions or unsafe areas and agricultural production is forecast to be 35% down from 2021 levels. Furthermore, with the area under agricultural production declining, so too has farmer liquidity. To align with the more challenging operational environment and smaller market, the Group took the difficult, but necessary, decision in August to reduce the size of our team in Ukraine. This included the provision of a comprehensive financial assistance package and additional supports to those impacted.

 

 

Poland

 

Poland delivered a strong performance in FY22 supported by a marginally improved cropping area compared to FY21.

 

Weather conditions were generally favourable during the year, with the harvest well progressed despite prolonged dry periods in some localised geographies. There was renewed focus on Origin's nutrition portfolio which continued to develop a more favourable mix of speciality and strategic products positively contributing to returns. The strong operational performance reflects the continued focus on working capital management and margin optimisation in the region. While farm sentiment has remained generally positive, it is being impacted by input price inflation which may influence on-farm decisions in FY23.

 

 

Romania

 

Romania reported a strong performance in FY22, ahead of prior year contribution supported by a larger planted area.

 

The harvest is well progressed across Romania, and despite good crop establishment earlier in the year, dry conditions across the country have resulted in a reduced yield potential of up to 20% for some crops. General farm sentiment, while overall positive, is impacted by price uncertainty across a range of inputs and the dry conditions are challenging for autumn seed planting.

 

Working capital management continued to be an area of focus during the year together with a focus on improving the mix of higher margin speciality and strategic products. The result was a working capital inflow year-on-year and higher margin delivery.

 

 

Ukraine

 

Activity levels have reduced sharply since the start of the war, with on-farm liquidity significantly impacted by the limited sale of last year's crop. In the last two years the Group has undertaken a significant de-risking of the balance sheet in Ukraine through a sustained focus on working capital reduction.

 

The Group's top priority remains ensuring the safety and wellbeing of our colleagues and the continued de-risking of the balance sheet in Ukraine. The Group continues to closely monitor the situation on the ground and support the limited localised operations in areas away from conflict, overseen by the local team.

 

 

Latin America

 

				Change on prior period
		2022 €'m	2021 €'m		Change %	Underlying2 %	Constant Currency3  %
Revenue		73.2	39.0	87.9%		71.4%	71.4%
Operating profit1		9.7	6.3	53.7%		37.7%	37.7%
Operating margin1		13.2%	16.1%	(290bps)		(320bps)	(320bps)

 

1	Before amortisation of non-ERP intangible assets and exceptional items
2	Excluding currency movements and the impact of acquisitions and disposals
3	Excluding currency movements

 

The Latin American ('LATAM') reporting segment incorporates the Group's operations in Brazil.

 

Latin America delivered a strong performance in FY22, sustaining the momentum of FY21, with operating profit increasing to €9.7 million from €6.3 million in FY21, with an underlying increase of €2.4 million.

 

There was an underlying increase in crop input volumes of 43.4%. The volume development and underlying growth is driven by increases in our core product range and a significant increase in controlled release fertiliser volumes, following the completion of the Group's new production facility in Minas Gerais in the second half of FY21. Volume growth during the year was driven equally by controlled release fertiliser volumes and the core product portfolio.   

 

The overall result was supported by an increase in the cropping area dedicated to soya, Brazil's principal crop, to 41.5 million hectares from 39.2 million in FY21. Planting of the FY23 soya crop has commenced, with initial estimates of the planted area increasing by 2.9% to 42.7 million hectares.

 

 

 

ENDS