Origin’s agronomy unit drove profit growth last year as farmers sought expert assistance

ORIGIN ENTERPRISES has continued to ride the wave of the high-performing agricultural sector, with the publication yesterday of a strong set of full-year results.

The performance was not unexpected – earlier this week NCB Stockbrokers upgraded the stock to “buy” in anticipation of positive figures.

Origin has undergone a period of transformation in recent years. In November 2010 it offloaded its consumer foods business, which included well-known brands such as Odlums, Shamrock and Roma, as part of a merger with Batchelors, creating a new entity, Valeo foods.

While Origin maintains a 32 per cent shareholding in the joint venture, the shift in focus allowed it to concentrate on its core activity – agri-business, with the company acquiring a number of British agri-input companies.

Origin Enterprises is a major player in the agricultural business in Ireland and Britain, and it also has a presence in Poland. Between 70 and 80 per cent of its business is in Britain.

In its core agri-services division it has two main businesses – agronomy, or advisory services, and agri-inputs, mainly fertiliser.

Last year the agronomy division drove revenue and profit growth, as particularly challenging weather conditions for farmers led to a demand for the company’s advisory services. Origin announced yesterday it would invest €25 million into this side of the group over the next four years, suggesting this is a focus for the business.

It also hinted yesterday at further geographical expansion.

The company’s Polish business, Dalgety, which provides agronomy services to farms in Poland, had a strong year.

NCB also highlighted the potential for further expansion. Noting Origin had “significant opportunities to grow market share and revenue per customer in the UK”, it noted the company also has significant opportunities to recreate its agribusiness model in other European markets, particularly in eastern Europe.

Whatever the plans, Origin is in good shape, and its announcement of a 36 per cent jump in dividend to 15 cent per share will be good news, particularly for 74 per cent shareholder Aryzta.

With the Swiss company due to report its full-year results on Monday, the debate as to whether Origin still fits strategically with Aryzta will no doubt resurface.

Based on Origin’s strong operating results and its positive outlook for 2013, Aryzta is likely to sit tight in the near-term.