Origin Enterprises plc

Good morning, ladies and gentlemen, and welcome to the Origin Enterprises PLC interim results presentation 2025. Just a reminder that this call is being broadcast online and the presentation is available to view on the Origin Enterprises website. I will now pass over to Sean Coyle, CEO of Origin Enterprises PLC. Please go ahead, sir.

Thank you, Sergey, and good morning, everyone, and welcome to the first half of the 2025 year conference call. I'm joined by my colleagues, Colm Purcell, our Chief Financial Officer, TJ Kelly, Managing Director of our Living Landscapes Division, and Brendan Corcoran, our Head of Investor Relations. Firstly, we'll proceed the presentation by giving the typical safe harbor statement, and we'll move on to the figures now. So overall, we've had a very strong first half performance in the year with strong growth in organic operating profit, as well as some supplemented growth through acquisition in the living landscapes division. Despite the fact that volumes in Q1 of last year were down by 12.3%, In the Ireland UK segment, we have seen a very strong recovery in the second quarter and we're down by 1.5% at the end of H1. The business has seen recovery across Ireland UK and living landscapes has grown significantly as well with operating profit growth of 17% and EPS growth of 38% in the period. As I said, agriculture has seen a strong bounce back. And were it not for the depreciation of the Brazilian RAI against the euro, in fact, we would have seen very strong growth within the agriculture segment as well. So the improved planting area and on-farm conditions in the northern hemisphere has helped the recovery significantly. but largely that has been, I suppose, offset by weaker Brazilian RAI against the Euro, resulting in a decline in the LATAM profit, and overall agriculture is lying ball with last year as a result of that. Our living landscapes business continues to scale up reasonably quickly with a strong growth and operating profit driven by both organic growth and also the benefit of some of the acquisitions which were completed in the first quarter of the year. We continue to focus on our capacity to grow and we have strong financial strength with a new facility agreement recently negotiated which extends our facilities out to 2030 with the option to extend those by two further one-year terms. a slightly larger facility at 440 million compared to the 400 million which we previously had. We completed the final element of our 80 million euro share buyback, which was flagged at the capital markets day in 2022. And that was completed again in the first quarter of this year. From a strategic perspective, we continue to focus on developing the scale and range of products and services offered in the living landscapes businesses and that's been a success in the first half of the year as you can see from the the figures and we've appointed a group head of biostimulants adjuvants and micronutrients to continue to develop and support the growth of the value-added products within the agriculture segment you can see the individual figures for each of the divisions within the colored boxes on the top right hand side of the page and I don't intend to go through those now as we'll touch on those in more detail later on. So we began a rebranding journey this year and have I suppose been disclosing separate reporting divisions now for a couple of years in order to bring clarity to investors and We're separating our agriculture division and our living landscapes division. And that should provide visibility to the margin profile of living landscapes, which continues to improve and which should have a higher margin profile than our agriculture business. It allows us to see the real growth rate of that division when separated out from the agriculture businesses. And we should also be able to see the lower working capital commitment to that living landscapes division. Business over time as we show the separate reporting and you can see the three principal areas in each of agriculture and Living landscapes that we report on on the page So firstly to our agriculture businesses within the Ireland and UK segment we saw strong growth within the period the operating result for the year or half year of improved by 3.4 million, driven really by strong fertilizer demand in Ireland, a much larger UK wheat cropping area in the UK, and decent momentum now going into the second half of the year, with a decline in H1 volumes of just 1.5% compared to the Q1 decline of 0.3%, but a very strong order book within both our fertilizer and feed businesses going into the third and fourth quarters. A couple of the dynamics from a backdrop perspective, certainly grain and oilseed prices are causing some concern at a farm level. So there is a level of spend which is held back given grain and oilseed prices internationally. And that has been a challenge, I suppose, in terms of progressing demand on farm. But we do hope that that will improve in the second half of the year. As I said, soil nutrition volumes are doing reasonably well. And in contrast to the low grain and oilseed prices, there is really strong demand and strong output prices within the dairy segment. Beef prices are strong. Pork, poultry and egg prices are strong. And that has helped considerably to drive demand within our animal nutrition segment, as well as the lack of fodder within the Irish marketplace due to poor grass growth during the course of 2024. So that poor fodder availability and very strong output prices for all of the major non-grain kind of segments of the market have certainly driven growth within our animal nutrition businesses. Within continental Europe, again, it's been a mixed picture. Poland certainly performing very well with strong growth in the higher margin categories of BAM and seed, and seeing volume growth as well. And Romania seeing higher volume growth levels actually than in Poland, but a real mixed bag in terms of the types of product being purchased, certainly trending towards lower value products and despite the fact that winter cropping has grown within the Romanian market the mix of product sales has trended towards the lower value and lower margin items within Romania so profit in Poland up and profit in Romania down on the previous comparable period but overall we're seeing a reasonably steady performance within our central European businesses and were reasonably comfortable that were well set for a strong second half performance within that market. Within Latin America, we touched already on the impact of currency translation within the business. And overall, before that currency translation, we saw a very small diminution in profit for the first six months of the year. back by circa half a million on the trading picture in the first half of 2024. That's come about despite volume growth of 11.5%. And principally, it's a result of a change in mix of profile of the products sold. So we're seeing growth across all product categories, but faster growth within the lower margin controlled release fertilizer space compared to the speciality products and P&N products that we would typically sell within this business. And there has also been some margin shrinkage at a gross margin level, a small few percentage points of gross margin reduction as a result of what is a fairly intensive and price competitive market in Latin America at the moment. We've talked before about the impact of overstocking at the retail level within LATAM. and the impact that that has had on some of the people that we supply to. AgroGalaxy, who we previously would have considered a reasonably big customer, went into Chapter 11 at the tail end of last year. And a number of our other customers are also having challenges in terms of continuing to maintain a good credit profile within the market. And where our credit insurance has been withdrawn or taken away, we've simply switched off sales. So AgroGalaxy and a number of other large customers have seen that credit withdrawn in the market and we've simply had to go and find other customers and sell to other customers in the context of what is a pretty challenged market over the last 12 months. But you can see there we've engineered and I suppose delivered a reasonably good outcome despite all of those challenges on the sales front. So we are able to find new customers, we are able to find good paying customers within the marketplace, but it has come, I suppose, at the expense of a small amount of reduction in selling price as a result of that.

TJ. Thanks, John. Moving to living landscapes then, which had a strong start to the year, as you've highlighted, with operating profits up €2.3 million the prior year, with €0.7 million of that coming from the newly acquired businesses in the portfolio. Underlying profit improved year on year, driven by our sports business, where generally playing surfaces and the urban and green spaces that we service had improved autumn conditions relative to the prior year. And we continue to see the benefits of driving growth through an improved and broadened product offering in the space. In our landscapes business, again, I would say conditions were generally improved year over year, that the autumn 24 was somewhat improved over autumn 2023. And we saw the benefits equally of expanded product offerings in that portfolio in part through the acquisition of the ground tracks business and the additional product portfolio that that has given us. I would say overall, both the sports and landscapes businesses, given the solid start in the first half, are well positioned for the second half of the year. Looking at our environmental businesses then, in addition to the contribution of the newly acquired businesses in the first half, we did see good underlying growth in both NEO and Keystone environmental businesses. And we see the market remaining strong for the environmental and ecology consulting businesses as we look into the second half with overall solid to strong pipelines of businesses for the second half and therefore the full year. The graph on the bottom left-hand corner then just really demonstrates for us the evolution of the earnings performance over the last number of years, albeit H124. was slightly impacted by those poor conditions on site, as I said, but we're seeing the benefit of the acquisitions and underlying growth in performance coming through in the first half of this year.