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Edited Transcript of OIZ.I earnings conference call or presentation 5-Mar-20 8:00am GMT

Half Year 2020 Origin Enterprises PLC Earnings Call

Mar 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Origin Enterprises PLC earnings conference call or presentation Thursday, March 5, 2020 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Sean Gerard Coyle

Origin Enterprises plc - CFO & Executive Director

* Thomas Joseph O'Mahony

Origin Enterprises plc - CEO & Executive Director

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Conference Call Participants

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* Cathal Kenny

Davy, Research Division - Senior Analyst of Food and Beverage

* Jason Molins

Goodbody Stockbrokers, Research Division - Analyst

* Sophie Maye Jourdier

Liberum Capital Limited, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. And welcome to the 2020 interim results conference call. (Operator Instructions) I must advise you that your conference is being recorded today on Thursday, the 5th of March 2020.

I would now like to hand the conference over to your speaker today, Tom O'Mahony, CEO of Origin Enterprises plc. Please go ahead, sir.

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Thomas Joseph O'Mahony, Origin Enterprises plc - CEO & Executive Director [2]

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Good morning, ladies and gentlemen. And welcome to this presentation of the interim results for Origin Enterprises for the half year to 31st of January 2020, and I'm joined by my colleague and CFO, Sean Coyle.

So turning first on the presentation to the interim results highlights. And so overall, it's been a challenging and difficult start to the year with first half revenue back 13.8%, group operating profit loss of EUR 2.8 million against EUR 9.1 million in the previous period. And that really reflected significant period-on-period contribution reductions in our largest division, Ireland and U.K., and that's significantly overshadowed good performances within CE and our LatAm divisions.

Net debt increased by about EUR 26 million. That is largely reflecting incremental working capital in Ireland and U.K., and Sean will take us through the details of that. And an interim dividend has been declared and will be paid on the 14th of April of EUR 0.0315 per share.

From an operational perspective, the performance reflects significant demand reduction on the back of extreme weather challenges in the U.K., which drove a dramatic reduction in the high-yielding winter oilseed rape and winter cereal cropping base. This has been the lowest planted area in over 30 years. And we'll go into that in a bit more detail in the presentation.

In terms of Continental Europe, the cropping base, as we head into the main period of seasonal activity in the second half, is favorable. Activity has already started, which is a good sign and early start, and we've seen strong working capital performances in the first half.

Our LatAm division delivered a good performance in what is the seasonally important period in Origin's first half. Operational progress in digital has been good, and now we've over 1.2 million hectares onboarded on to the platform.

So turning to the next slide, ladies and gentlemen, and just very, very briefly on this slide, looking at Origin at a glance. So we're an international Agri-Services provider. We supply digital agronomy services and crop inputs to over 50,000 farmers, growers and immunity professionals across 7 countries.

Revenue and operating profit, group operating profit for the 2019 year was EUR 1.8 billion and EUR 82 million, respectively. And we generate, in a normalized year, about EUR 50 million to EUR 55 million of free cash flow.

So turning back then to the details in the first half. And firstly, we'll examine the revenue bridge and analysis of underlying agronomy services and crop input revenue for the 6 months. And on an underlying basis, that's excluding acquisitions and currency, there was a reduction in revenue of 18.68%. The components of that underlying increase was volume, 19.14% reduction, and price impact was actually negligible within the period, less than 0.5%. The underlying volume reduction of 19% is split pretty evenly across the products, principally fertilizer and crop protection.

So if we turn to the next slide then and look at the detailed commentary on the individual operating segments. Firstly, Ireland and U.K., where we see there was an operating loss of EUR 9.1 million against an operating profit last year of EUR 2.8 million and that really reflects an underlying business volume reduction of 25.6%, so much bigger than the total group of 19%. And that is really driven by lower demand following that 1.1 million hectare reduction in U.K. cropping on the back of that extreme weather. Now our estimates would indicate that approximately 55% of that 1.1 million reduction in the traditional winter cropping area will transfer to spring hectares and approximately 45% will remain as fallow, that is on planted hectares. An important component as well, just to understand, is that we had strong feed and fertilizer volume comparisons in the prior period, largely reflecting higher demand due to greater seasonal intensity last year. We would have highlighted that within our preliminary results last year. And in terms of the delta, the operating loss delta of approximately EUR 11.7 million. That stronger comparison would account for about 10% of that delta overall.

So what is that saying? It's saying that we are going to see or we certainly anticipate significantly increased and more concentrated seasonality in the second half of the financial year in Ireland and the U.K., and that's reflecting the extent of catch-up cropping activity that has to take place, and obviously, field their work as well. And that's all predicated on normalized spring weather patterns really between now and early May.

In terms of our amenity portfolios, they delivered a good performance with demand returning to more normalized expected levels against the previous period. We saw that increased working capital investment, as we touched on at the start, and that actually really reflects the lower sales activity within the period. And digital service enablement is progressing well, really reflecting enhanced functionality and adoption.

If I just go to the next slide and just to express the extent of the challenges that the farmers faced in the U.K. So what we have graphed here is a 30-year window of winter wheat production in the U.K., and we've correlated it to, what we call, the number of rainy days. So continuous days rainfall, which is a very good proxy to measure the area that's actually planted. And we can see 2020, the actual dramatic drop in the planted area relative to a significant increase in the number of continuous days rainfall and particularly days rainfall in excess of 5 mil (sic) [5 mm]. And that actually speaks directly to the saturated nature of the soils this season and the inability of crop growers to travel on land to carry out the essential planting and crop maintenance. The most proximate year to that would have been 2001, as you will see in the graph here. So by any measure, we see this as an extreme event, whether you look at a 30-year window or even the last average of 5 years. And certainly, we would expect a return to a normal winter planting in 2000 and -- or in September, October 2020. So again, extreme conditions that we don't expect repeated.

If we turn next then to Continental Europe. And on a reported and underlying basis, this is the less important half of trading in the business. And overall, the performance has been good, really reflecting favorable crop establishment, as we had noted earlier, and improved business mix, selling higher margin technologies and a strong working capital performance. So overall, we believe the season is set up well year-on-year for Continental Europe.

In terms of development within the period, we've implemented and agreed new supply chain protocols within our Ukrainian business, really to help underpin commercial effectiveness following a challenging year back in 2019. Our Romanian and Ukrainian businesses, now we have extended the group-wide branding for on-farm agronomy services, Agrii, and that's an important step in the evolution and integration, particularly of the Romanian business driving that technical service on-farm. Digital adoption has progressed very well in the 6-month period. And now we have over 300,000 hectares onboarded on our platform.

If we turn now to LatAm and just for ladies and gentlemen who may not be familiar, LatAm largely essentially comprises our Brazilian base speciality inputs business, Fortgreen, and also a 20% interest in the sister company providing agronomy services and crop inputs. And the first 6 months is the seasonally more significant period for this business, probably representing 65% to 70% of operating profit. And overall, there's been a good performance as the business grew operating profit of EUR 5.7 million, which is, underlying basis, is 7.3% and of an underlying business volume growth of 2.9%. And overall product margins were stable. We would categorize this as a good performance against what was generally lower market demand, really driven on the back of a delayed soybean planting season. The main soybean planting season, which typically kicks off in mid-September, was about 5 to 7 weeks later and that would have influenced overall demand. And we'd expect that to continue somewhat into the second half.

I will now hand you over to Sean who will take you through the details of the financials. Thank you.

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Sean Gerard Coyle, Origin Enterprises plc - CFO & Executive Director [3]

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Thanks, Tom. We'll move firstly through our interim performance slide. Tom has touched on the revenue and operating loss figures. Net debt in the period increased by EUR 26 million, largely reflecting the outflow in working capital year-on-year. And our net debt-to-EBITDA ratio stands at 3.24x at the end of January, up from 2.57x at the end of January 2019. We do expect the normal inflow of working capital through the second 6 months of the year. So our expectation at this point in time is that the net debt-to-EBITDA ratio will be in or around 1.25x at the end of the fiscal year. Interim dividend held at EUR 0.0315 for the half.

We've included a new slide here, which shows the impact of weather on U.K. cropping, and the circles at the top of the page indicate the mix of crops planted, in particular within the Agrii business within 2019, where we stood at the Q1 trading update, our expectations at that point in time and our expectations as of the H1 trading update today and last week when we guided the market for the year as a whole. And you can see there the mix between early winter crops, late winter crops, spring cropping and other cropping and fallow. And fallow, you can see, was a negligible part of the FY 2019 number. Our expectation at the Q1 trading update was that it would be about 2% of total planting for the year, and the expectation now is that it will represent 10% to 10.7% of the total area under Agrii's agronomic advice and that's in common with the rest of the market.

The mix from a margin perspective, you can see, varies dramatically as a result of that change in cropping profile and gross margin mix changes because of the move from early winter planting largely into spring cropping or fallow. And believe it or not, there is a small yellow -- or small blue segment at the top of each of those 3 bar charts, which is the negligible contribution that we get from fallow land, a very small margin per hectare on selling cover crops at most into fallow hectares.

So there is still a significant portion of the season to happen. You can see there that looking at the gross margin mix, our expectation for FY '20 is still hugely dependent on spring cropping and the outcome of spring cropping for the remainder of the year, and that gives an indication of, I suppose, the level of risk that is now transferred into spring planting, and our hope that the land will dry up and spring planting will happen as normal is reflected within that gross margin mix.

So in highlights for the year, you can see there the revenue and profit numbers that Thomas talked about for the core businesses. Important to point out that associates and joint ventures have come backwards from EUR 1.8 million to EUR 1.1 million. That also reflects a contribution from Ferrari Zagatto, over 20% investment in that business of about EUR 250,000. So our feed joint venture businesses have had profit in the period, and that would have been in line with expectations and as guided back in September when we updated the market on full year results.

Positive progress in financing. Financing costs have come down by EUR 400,000, but the real financing costs are actually down by about EUR 1.2 million. So we have reflected the interest charge under IFRS 16 within these numbers. That's a charge of about EUR 850,000, included in that EUR 5.5 million. And the reason that the financing costs have come down so significantly is the average debt carried in our CE businesses is down appreciably year-on-year for that full 6 months' trading period, and interest costs are down appreciably in both Ukraine and Brazil. So the mix effect of higher debt in our U.K. and Ireland businesses at lower interest rates and lower debt in our CE businesses, which traditionally have higher interest rates in tandem with lower interest rates in Ukraine and Brazil has led to a reduction in the real financing, a real cash cost of about EUR 1.2 million in the half versus the first half last year. Our net debt is up by over EUR 25 million, largely reflecting the increase in the working capital in the period.

From an underlying perspective, the bulk of the EUR 108 million in revenue fall is associated with the U.K. businesses. There is a very small contribution from a revenue perspective. 2 weeks of the Fortgreen business in August, which we didn't go into business for; Symbio and VCS, 2 small U.K. acquisitions, which we had last year, are also reflected in that number.

And from a currency perspective, the major movements in there are the hryvnia and the movement of sterling versus euro in the period.

From a group operating profit perspective, again that delta in profit on an underlying level is all Ireland and U.K. and there are fairly negligible impacts from both acquisitions and currency in the period. And again, from an earnings per share perspective, the picture is similar, relatively small impacts both from an acquisitions and currency perspective in the period. And really, all of the underlying delta is Ireland and U.K movement.

On the cash flow, the cash performance is slightly better than the profit performance, which is good, but we still do have a movement outwards in working capital in the period. Tom mentioned the strong performance in the CE businesses. We had a relatively small outflow within our Brazilian business, EUR 1 million to EUR 2 million in the period, and within our CE businesses, a strong inflow, close to EUR 40 million in inflow within the CE businesses. And as I mentioned, when talking about the interest charge, that was pretty strong right across the full 6 months. It didn't just happen at the period end. There was good cash collection and good control of the CE businesses from a cash perspective in the full first 6 months of the year. So that was positive.

There are some relatively minor exceptional and one-off items in the period. And most of the EUR 1.5 million there or a large part of it at least was accounted for in last year's P&L. So a relatively small exceptional charge, offset by a small exceptional gain from a P&L perspective this year, but no new major exceptional items in the period.

From a balance sheet perspective, again IFRS 16 has had an impact here. So you can see the lease liability, 3 quarters of the way down that you see here, coming in for IFRS 16 at EUR 43.5 million, and that's offsetting the tangible assets, the first line, largely by the reflection of the other side of that transaction.

Goodwill down year-on-year, largely because of the Ukrainian impairment at the end of FY '19. And you can see the working capital movement of EUR 28 million reflected on that page. No other major highlights to touch upon on that page.

So from a banking perspective, net debt-to-EBITDA ratio at 3.24x. We do expect that to unwind by 2x as is normal with the inflow of working capital in the second half of the year. And we have looked forward out to January 21 at this point in time and we're comfortable that the covenant ratio, the net debt-to-EBITDA ratio, will be closer to 3x than it will be to 3.5x and very close to 3x at worst. And that doesn't reflect any of the potential proceeds from property sales which we're not banking on happening with any certainty within the calendar year. So while it is likely that the first tranche of core property will be sold within the calendar year, there are a number of conditions precedent, which need to happen before the money can be realized, and we haven't built that into our cash flow projections. So there is potential upside on that number and potential benefit to be had on top of the normal trading performance. And there are a number of other smaller pieces of land which the organization owns and which are being marketed at present, which may realize some smaller sums over the course of the next 6 months.

So I'll hand back to Tom for business review, and we'll deal with any questions later.

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Thomas Joseph O'Mahony, Origin Enterprises plc - CEO & Executive Director [4]

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Thank you, Sean. So turning to the next slide, ladies and gentlemen, and just very briefly, our business model, particularly in the context of a current challenging year. Our business model, whether it's direct to farm which represents about 61% of the revenue or B2B, our whole approach is to market technologies directly for infield application, irrespective of the customer channel, and using a research technically led solutions-based approach to address our customers' requirements for the profitability, their environmental requirements, yield enhancement and the whole area of supply chain complexity. And we differentiate based on that agronomic expertise and that whole in-year agronomy to ultimately maximize the available crop potential for our customers. And that is very, very important in a very difficult year like this. And the business model is very well set up to that and that enables us to optimize value in the season and that is particularly relevant in a challenging season like we are now going through.

If we turn to the next slide, I think, clearly, our biggest division, Ireland and the U.K., has had its biggest challenge since we have listed as a public company. Equally, I think the returns in CE have been below our expectation, and that's really reflecting lower liquidity and profitability at farm level in those geographies, generally reflecting declines in crop output prices and some poor yielding years. And we're looking to address those issues and have been for a number of years, and we are progressing a series of detailed actions in response that really to grow margin, firstly through our existing footprint through focusing on commercial and product alignment, sales management and robust cost management, targeting new business models to identify new business opportunity, whether it's in value-added crops, it's in adjacent agronomy sectors and enhancing the overall offering through our digital capability. And finally, strengthening the presence awareness and the differentiated nature of what Origin has to offer across all of our markets through the rollout of our Agrii identity and acting as that unification brand for our business.

And the implementation of these initiatives is grounded in detailed plans around our people, performance management and execution process. And in a similar vein, particularly given the challenges in the U.K. from a balance sheet perspective, our focus is very much on optimizing cash generation. We will pause M&A activity for the time being and continue to focus on driving those working capital efficiencies, particularly within Continental Europe.

Just a very brief slide, ladies and gentlemen, on the next one because it is gaining an increasing narrative on the whole area of a climate change. And what I would say on this is that agriculture has a fundamental role to play in, a, mitigating the effects of climate change and in helping the achievement of governmental targets on climate change. And agriculture is probably one of the very few industries who has the capacity to absorb carbon at scale, so -- to really drive change there. And again, we point to Origin's business model in terms of its digital capability, its best practice input application, that knowledge transfer really positions our business at the heart of supporting growers lift their environmental stewardship requirements and capability to a new level and, importantly, without compromising productivity on-farm.

So in summary, ladies and gentlemen, it has -- without question, it's been a highly difficult, challenging first half. We have experienced the most challenging cropping season in over 30 years. Our Continental Europe and Latin American businesses have performed well, in line with our expectation. And as Sean has pointed to, the FY '20 performance is ultimately all about the seasonal activity in the second half, particularly within Ireland and the U.K., and we'll be in a position to provide a more comprehensive update on guidance when we announce our third quarter trading update in June of 2020.

So that concludes the presentation, and now we'd be delighted to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we will take our first question from the line of Jason Molins from Goodbody.

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Jason Molins, Goodbody Stockbrokers, Research Division - Analyst [2]

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Look, presumably, you've not been alone in the challenges that you're seeing in the U.K., in particular, at the moment. Just wondering what you're seeing on the ground from maybe some of your competitors? And I guess where I'm coming from is, we saw the impact from a competitive standpoint back in 2016 that may be materialized later in the year for you, but just to get a sense of where the market is at the moment would be useful.

And then secondly, just in terms of the reiteration in the statement around the Capital Market -- targets from the Capital Markets Day. You've obviously reiterated those and gave us some comfort. Can you maybe talk about the shape of that growth and how we should think about that, whether it's to recovery next year or how we should think about phasing?

I'm sorry, just a final question then maybe for Sean, just on that Cork disposal, can you just remind us the quantum and the quantum of that sort of first tranche that might be commensurate from a cash flow perspective?

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Thomas Joseph O'Mahony, Origin Enterprises plc - CEO & Executive Director [3]

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Sure. Thanks, Jason. So firstly, if we take 2016, the essential difference between '16 and '20 is that the cropping base, the autumn and winter cropping base was there. So the season was set up. If you actually just refer back to that graph, you'll see that the cropping base was there. So the season was actually set up for a normal spring input application and it didn't happen. It got significantly impacted. And that actually led to some competitive intensity within the market itself. This year is slightly different because, a, the cropping base isn't there, and we would say supply chains have been adjusting to that effect. That's not to say that there will not be competition when the season starts. We have to remember the season has to start. The spring cropping area probably has to grow about 34%, 35% year-on-year. And the capability is there to do it. There is the capacity in the system to do it based on the numbers we've actually issued today. And I think what you're likely to see here is intense activity, Jason, absolutely intense activity. Growers getting out with a 2-week open window to drill crops will be going at a very, very intensive pace to maximize the potential of their crops to get it into the ground as quickly as they can. So it will be a different dynamic. I don't think we should discount that there won't be a competition. But remember what we said at the start, our role is to help these -- help our customers, growers, maximize potential in a very, very difficult season. How do they recover poorly established winter wheat crops already in the ground? How do they maximize returns out of lower yielding spring crops? So I think it will be a different dynamic. But nonetheless, there will be competitive pressures there, but we believe we're able to actually address those.

In terms of the Capital Markets Day, I think the important point is in our targets, we would have outlined organically but growth across that 5-year period to 2023 of roughly 3% to 4%. And we absolutely believe that they are valid and achievable. Today, we would expect a strong recovery next year. We will likely see earlier planting of winter crops as the growers will use the opportunity, particularly where they actually haven't planted -- they've taken the decision to plant cover crops, as Sean says.

And the acquisition component of the growth on top of that is a 2% to 5%. It tends to be more phased, and we've taken the decision for the right reason given the actual cash dynamics in the market to pause M&A, but we don't see that in any way -- this is a 1-year challenge for us, and we need to be sensible as to how we manage through it. We don't see that in any way limiting our ambition to deliver the overall component of that actual growth itself. And Sean now will address the Cork property if that's okay.

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Sean Gerard Coyle, Origin Enterprises plc - CFO & Executive Director [4]

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Yes, Jason, when we announced Cork, the total proceeds were up to EUR 47.5 million. I think EUR 22.5 million of that is associated with the first disposal, which is sites that we currently do not occupy and are available for occupation by a developer immediately. There is a further site which we use on a temporary basis for storage of some product, but isn't the operational size, and again, that could be sold. That's a further EUR 9 million, I think. So I would imagine the proceeds of EUR 22 million should flow in the calendar year, assuming the final technical requirement is addressed, which is a political, I suppose, judgment, which needs to happen and a movement of property between Port of Cork and the city of Cork in order to allow the transaction happen.

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Jason Molins, Goodbody Stockbrokers, Research Division - Analyst [5]

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I mean is there any sort of schedule timings around the political approval to that? Or...

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Sean Gerard Coyle, Origin Enterprises plc - CFO & Executive Director [6]

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No, there isn't. There isn't, unfortunately.

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Operator [7]

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(Operator Instructions) And your next question comes from Sophie Jourdier from Liberum.

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Sophie Maye Jourdier, Liberum Capital Limited, Research Division - Analyst [8]

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On the U.K. business, again you mentioned in the statement that you're focusing on optimizing operational performance. I just wondered in the context of this being simply a 1-year challenge, what exactly are the actions you're taking to, I guess, get through this year?

Second, in a way following up from Jason's question, just what you're seeing on pricing in the industry at the moment? I mean, obviously, your prices were broadly flat in the first half, but what's happening on the ground as it were? And I think we'll leave it there for the moment.

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Thomas Joseph O'Mahony, Origin Enterprises plc - CEO & Executive Director [9]

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Thanks, Sophie. So in terms of cost management, I think what we are saying clearly here is there is a number of initiatives that we're doing internally within the business, but importantly not to incur exceptional cash charges. We think that is very, very important to us. So you will see standard things like we have recruitment freezes across the organizations. We've had a level -- good level of reduction head count within our CE business and a number of positions that are not being actually backfilled. Obviously, performance-related bonuses will be a clear impact this year, and that's been communicated throughout the group itself. So it is very much focusing on general things, but without incurring massive restructuring charges. Because the point is we need to make sure that the business is appropriately positioned when it -- when we come through the actual weather event itself. In -- now what -- an important point is some operational costs, we're likely to -- given the concentrated nature of the season, we're likely to see some higher operating cost to serve customers within the season and that would be expected. But that is very much sort of season and timing delivered and wouldn't be material.

In terms of pricing, Sophie, I think, on fertilizer, we didn't see, in looking at the actual pricing mix there, major price declines. I think you'll see that come through more in the second half, as most of the nutrient pricing has been soft, as you will know.

In terms of crop protection, we're not -- we're certainly not seeing any price inflation. You would have expected to see price inflation probably for a number of years now. We see it in some of the actual generic ends of the market or the wider elements of the market. But we aren't seeing any specific price inflation there. And the most important thing from our perspective is segmentation that the actual offers are very specific to our model, delivering for the actual customer. So we want to expose ourselves less to more price-sensitive sectors and really focus on working with the grower and tailoring the actual programs to suit their needs, particularly this season. We'd like to see a shift in mix. There'll be -- so there'll be a heavier waiting towards micronutrition given the challenging nutrient profile of soil with all the actual water and runoff, et cetera. And that has been set up within the business.

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Sophie Maye Jourdier, Liberum Capital Limited, Research Division - Analyst [10]

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And sorry, can I ask just one more question, just on the Ukraine business. You talked about some implementation of a new supply chain model. Could you just elaborate a little bit on what that actually is?

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Thomas Joseph O'Mahony, Origin Enterprises plc - CEO & Executive Director [11]

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The best way I described it on the call here, Sophie, is with our partners -- with our manufacturing partners understanding what the returns should be for the role we actually play. So it's us giving commitments and it's our manufacturing giving appropriate commitments as well. And I think that's the best way to actually describe it. We are very clear in terms of the market channels we wish to serve. We're very, very clear in terms of the actual technologies we would wish to market and work with our manufacturing partner because distribution is integral to all the markets. And if distribution can't generate sufficient returns, then there is a big question. And I think that's acknowledged across all stakeholders.

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Operator [12]

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We have no further questions at this time. (Operator Instructions) And we have one more question. It comes from the line of Cathal Kenny from Davy Research.

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Cathal Kenny, Davy, Research Division - Senior Analyst of Food and Beverage [13]

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Two questions from my side, both working capital related, 1 long term, 1 short term. Just interested for comment in the working capital profile in the U.K. and Ireland as you head into the seasonally more important second half.

And then longer term, just for levers you have available to you to take capital out of that working capital position and maybe improving free cash and that's on a 2-year basis, I guess?

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Sean Gerard Coyle, Origin Enterprises plc - CFO & Executive Director [14]

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Yes. I mean I suppose the U.K. profile at the moment, Cathal, is very heavily weighted towards investment in the fertilizer businesses, in particular. The stock level within the Agrii business, for example, is running at a lower level than January of '19 and working capital level within the Agrii business is flat to slightly down on last year. So not overly concerned about stock levels or positioning within Agrii. And it's largely the fertilizer businesses that simply haven't gotten moving in terms of the season. So we would expect the application season to really start motoring. It has been strong volumes out of our blending plants, both in Ireland and U.K., have picked up appreciably since, I suppose, the third week of January and have been moving fairly well over the course of the last 5, 6 weeks or so.

Longer term, I would think the major opportunity apart from returning back to a normalized position in Ireland, U.K. over the course of the summer and into next winter, longer term, the real opportunity continues to be in CE, and there remains opportunities within CE to continue to drive a higher level of cash sales within the business and to continue to drive, I suppose, better and more optimal outcomes in tandem with our suppliers in those markets. And it's about cooperation with the suppliers, it's about getting an understanding between the suppliers and ourselves about the real dynamics that operate from a cash collection perspective in those markets. And good partnership has been found this summer, particularly in Ukraine and more can be done, and we will be continuing to work away.

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Operator [15]

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We have no further questions at this time. I would now like to hand you back to Tom for closing remarks.

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Thomas Joseph O'Mahony, Origin Enterprises plc - CEO & Executive Director [16]

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Ladies and gentlemen, thank you for listening to the presentation and your questions, and that concludes this conference call. Thank you. Bye for now.

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Operator [17]

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That does conclude our conference for today. Thank you for participating. You may all disconnect. Speakers, please stand by.