Origin Enterprises plc (OIZ) Earnings Call Transcript & Summary

Welcome to the Origin Enterprises plc 2026 Preliminary Results. Just a reminder that this call is being webcast live on the Internet, and the presentation is available to view on the Origin website. I will now pass over to Sean Coyle, CEO of Origin Enterprises plc. Please go ahead, sir.

Thank you, and good morning, everyone. I'm joined this morning by Colm Purcell, our CFO; TJ Kelly, the Divisional Managing Director of our Living Landscapes business; and Brendan Corcoran, our Head of Investor Relations. We're delighted this morning to be bringing you a very resilient set of operating numbers, particularly given the context of the challenges that the business has faced over the last 12 months. We'll start firstly with the normal safe harbor declaration. So the business produced an increased overall group operating profit number of just over EUR 100 million, growth in constant currency of just under 3%. We also grew earnings per share in the period in constant currency, although we're slightly behind on a reported basis. And our free cash flow conversion, which Colm will talk to a little bit later on, was strong at almost 90%. The business produced a very balanced performance with challenging operations in a number of markets, which I'll touch on in a second, but growth in Latin America, growth within our Animal Nutrition business, and our Living Landscapes businesses, balanced softer European agricultural markets, particularly in our farmer-facing Agrii businesses in the U.K., in Poland and in Romania. We continued with our strategic progress on growing the Living Landscapes division, a combination of organic growth and prior year acquisitions saw the Living Landscapes business grow EBIT by 10% on a constant currency basis, roughly 50% coming from each of organic and acquired growth, continuing to broaden the overall earnings base of the group. And our financial position remains strong at year-end. And again, Colm will talk to those metrics later on. So the breadth of the business and the continued investment in the second core of Living Landscapes has meant that the group has made significant progress over the last 5 years, and we've just concluded our 5-year strategic cycle from '22 to '26 with a very resilient performance and a significant uplift in profit over that cumulative 5-year period versus the prior 5-year period. Some of the challenges and backdrop to what we faced in the last 12 months, with significant drought and difficult cropping conditions across European agriculture. Farm economics remain very challenged, whether it's the cereal sector, whether you're growing oilseeds or indeed in dairy production, profitability on farm is significantly lower this year than it has been in previous years. And that hasn't helped because we've had significant input cost inflation, particularly in fertilizer markets as a result of the conflict in Iran, the Strait of Hormuz and the various impacts that, that's had on global pricing of fertilizers and the impact that we've had on the oil markets generally has all played into a difficult time on farm for our customers. There continues to be significant sector consolidation and a number of exits in the market, particularly in Poland and Romania. We're seeing competitors go out of business. We're seeing court actions in terms of insolvency proceedings. And in Latin America, we've got a significant number of insolvencies. The overall default rate on bank debt in the Latin American market is now well above 15%. And the previous high for defaults in the sector was running at about 6%. So a huge amount of turmoil within our competitor base and to an extent within our customer base across the Latin American and European markets that we're playing in. Despite that, though, we're seeing volume growth, continued growth in production and a continued move towards specialty nutrition, biological products and products that are typically at the higher end of the margin scale, particularly in Latin America. Our Living Landscapes business saw continued structural market growth. And as I said earlier on, a combination of organic growth and contribution from acquisitions saw that business grow in 2026. So we'll touch firstly on agriculture. The overall contribution from agriculture is slightly ahead year-on-year when you include the feed contribution from our associates and joint venture partners. Operating margin slightly down across pretty much all of our businesses with the exception of Latin America, where we saw a small increase in operating margin. And we have had lower profitability from both our Ireland U.K. segment and our Continental European segment, reflecting those challenges on farm and some of the dry conditions, which restricted the need for farmers to apply products, particularly in the latter part of the financial year. So that final quarter, significant dry conditions meant that farmers were not applying product to the extent that they normally would. Our market share in sustainable agronomy continues to be strong, #1 player in the U.K., #2 in Romania, where we've grown our market share in the last 12 months from 12% to 15%, and we could be growing that far more aggressively, but we're being cautious given the credit market in Romania about the extent to which we want to grow market share there. And #3 in Poland, again, small growth in market share in Poland. We may see that grow a little bit more in FY '27. But again, being cautious, trying to focus on specialty higher-margin products rather than the commodity end of the business. In Soil Nutrition, the business saw reduced volume, typically our Ireland and U.K. businesses, given the price increases and raw material inflation that we experienced, saw reduced volume of about 10% versus the previous year. And our Brazilian business continues to grow, a top 5 player in Brazil now with a 5% market share. And on the island of Ireland, our Animal Nutrition business continues to have a circa 50% market share. So a strong market position overall. To get into a little bit more detail on Ireland and U.K., you can see that with the exception of the 2022 year, which was a very unusual year with significant profitability from our fertilizer businesses, given the price inflation that occurred and the shutting off of Russian supply into the European market, we've returned to a pretty mean average across the Ireland and U.K. businesses. And that's despite a very sharp fall in profitability within our Agrii U.K. business. Our agronomy business, despite increased winter activity in the overall winter cropping base, did grow in winter wheat to 1.7 million hectares, and we had an extensive growth in the oilseed rape area last autumn as well. But the dry spring and summer reduced crop development, reduced yields and also resulted in crop protection demand falling quite significantly. So the tail end in Q4 of the business saw reduced demand. Farm economics, profitability of farmers also controlled, I suppose, the overall spend by farmers, certainly reducing fertilizer spend within the business and within the Agrii business. Our Soil Nutrition business saw a good performance, good procurement and inventory management through the period. CBAM was introduced within the Irish marketplace on the 1st of January this year and will be introduced on the 1st of January in the U.K. So managing supply and managing inventory in that context was hugely important. And there was huge disruption to fertilizer availability, not just that coming from the Gulf, but a number of core raw materials also go from the Gulf to Morocco to produce additional fertilizers and a lot of that was constrained. So managing supply in that kind of dynamic was difficult, but our teams managed it very well. From an Animal Nutrition perspective, huge demand across the feed businesses. Our associates and joint venture contribution was up significantly in the period, and demand was very strong right through to the end of the year and into the first quarter of this year as a result of fodder shortage, particularly within the Irish marketplace. So there is a need for farmers to continue to supplement feed as a result of the dry weather, and we're experiencing very strong demand and our competitors are experiencing very strong demand as a result of that. Across Continental Europe, overall volume was up by just under 3%, but there was a real mix in how that volume played out. Within our Polish business, fertilizer and seed volumes were down, but crop protection volumes were up and spend on farm was again constrained by farm profitability. Within Romania, we're seeing a continued move and migration to winter cropping within the Romanian market. Planting spring cropping now with increased instances of dry weather for summer periods means that the crop itself becomes under risk if it hasn't established and rooted properly over the winter period. So we've moved from roughly a 60-40 spring to winter cropping scenario to over 50% now in winter cropping in a Romanian context. We saw strong volume growth in seed, crop protection and fertilizer all because of those market share gains that I pointed out earlier on and the very challenging situation that a lot of our competitors in the Romanian market are finding themselves in. We have had to take higher credit risk provisions ourselves because of some of the farm economics and some of the challenges of historical debt. But despite that, we are seeing increased growth within our market share, and profit slightly down because of those higher credit risk provisions. We've also launched a couple of additional adjuvant products in the Romanian market for autumn of 2026, which you can see on the bottom of the page there. And then finally, moving to Latin America within the agriculture businesses. Again, we saw strong growth in constant currency, operating profit was up by about 9%. And for once, we saw the Brazilian Real move in our favor. So operating profit on a reported basis grew by a slightly higher 12.5%. The business is seeing continued growth in all product categories. We had volume growth of 4.3%, and that was broad-based and a pretty much every product category that we were involved in saw growth. There is significant pressure on the competition and across our customer base. And we did have additional bad debt charges in the Brazilian market included in this operating profit figure. So we would have shown a higher operating profit number had it not been for those bad debt charges, but the business continues to grow very well. And I mentioned the record level of sector bankruptcies earlier on. And again, you can see some of our new product launches on the bottom right-hand side of the page there. So I'll hand over to TJ, who will run through our Living Landscapes business.

Thank you, Sean. Good morning, everybody. As Sean said, Living Landscapes is now a key pillar of Origin's diversification strategy. We're contributing approximately 20% of group operating profit. And we would say our broad sports, landscapes, and environmental offerings do differentiate us in the market now and provide multiple growth opportunities through both expansion, service development and the longer-term land use trends that we see. For FY '26, Living Landscapes delivered another strong year, revenue increasing to EUR 199 million and operating profit rising just over 7% to EUR 17.7 million, maintaining a margin of 8.9% with growth driven by a combination of organic performance in part synergy-led and also contributions from prior year acquisitions. Looking at each of the components of the division, Sports performed particularly well despite the challenging dry summer conditions supported by what was strong demand across amenity and sports markets. The successful integration of Elixir and the post year-end acquisition of Linemark International further strengthened our market reach and cross-selling opportunities. Linemark International is our Danish-headquartered international distributor for our Linemark U.K. business. And through that acquisition, it presents us the opportunity to accelerate further our international growth trajectory. Landscapes was softer than the prior year, which reflected a shorter pre-planting season and reduced activity in some of the categories we serve, although long-term growth fundamentals remain positive. During the year, within the Landscapes businesses, we evolved the operating model moving from a business unit-led structure to a more commercially focused sector and portfolio-led one, therefore, better aligning our sales and marketing functions with our key customers and segments. Within Environmental, then, we continue to grow strongly through a combination again of both organic and acquisition performance, supported by infrastructure investment and an ever-evolving environmental regulatory backdrop. The post year-end acquisition of Lighthouse Development Consulting further enhances our planning services' capability with a particular focus on the renewables, energy and infrastructure sectors. During the year, we continued investment in our people through selective external recruitment combined with leadership and technical training. And in addition, we have been investing in the implementation of a common ERP and project management solution for our Environmental businesses, again, key to supporting future organic and acquisition growth. As we look back then over the last 5 years, Living Landscapes has delivered over 200% operating profit growth over that period, establishing itself, as I said, as a significant second pillar of the group with a strong pipeline of organic and acquisition opportunities across Sports, Landscapes, and Environmental sectors, ranging from further distribution growth to potential further manufacturing capabilities being acquired and continuing growing our advisory businesses, we are confident that the division is well positioned to expand further in higher margin and faster-growing markets as we look to the future. With that, I'll hand over to Colm.

Thanks, TJ, and good morning, everybody. Starting with some of the highlights then on financial performance on Page 14 of the presentation. Overall, we've seen growth in revenue, operating profit and earnings per share on a constant currency basis with the weakness in sterling impacting on the final reported numbers. Group revenue at EUR 2.1 billion is 2.3% ahead of prior year on a constant currency basis. This was largely driven by pricing of 3.1% and again, due primarily to the higher commodity markets that Sean would have touched on earlier, and a 0.7 benefit from our acquisitions. Volumes were 1.5% behind prior year. And as highlighted earlier, again, in the reviews of the different sections and higher input costs relative to output prices impacting on farmer spend in the year. We grew our wholly owned operating profit for the year by 0.5% on a constant currency to EUR 89.5 million, with growth in our Living Landscapes segment and our LATAM agricultural business, largely offset by our lower performance in the European agricultural businesses. Overall, agriculture operating profit of EUR 71.8 million was 1.2% behind prior year. Living Landscapes had a strong year with operating profit of EUR 17.7 million, representing growth of 10.1% and this was achieved equally through good organic growth and the full year impact of the prior year acquisitions. Our associates and joint venture results showed strong growth, and that was off the back of a very strong prior year, with share of profit up 23.9%, supported by strong animal feed demand in the year. Our operating margin for the year at 4.2% was down 10 basis points, which was due really to the reduction that we've seen earlier in the agricultural margin as a result of lower operating profits. Margins in our Living Landscapes business remained at 8.9%. Our overall EPS for the year was EUR 0.5351, which was in line with our Q3 guidance and delivers growth of 0.4% on a constant currency basis. This result again demonstrates the benefits of the diversified nature of the group with strong contributions from Living Landscapes and from our LATAM business, more than offsetting the lower performance in the other markets in what was a challenging year for agriculture across all of our markets. Looking down at our cash performance and our balance sheet on Page 15. It was a strong year for cash generation with our free cash flow at EUR 43.3 million, representing an 87.7% free cash flow conversion ahead of our 2022 Capital Markets Day target of 80%. Our overall net debt position at the year-end was EUR 77.8 million, which was EUR 7 million higher than last year. This equates to a 0.71x EBITDA and well within our banking covenant position at the end of the year. Overall, our finance costs amounted to EUR 22.6 million in the year, which was an increase of EUR 2.6 million, and that was really driven by a higher average debt level over the year, which was largely driven by a higher working capital investment, which we'll touch on, on the next slide. We also took the opportunity to extend our EUR 440 million revolving credit facility in the year with maturity now in 2031. Our working capital outflow in the year amounted to EUR 26.4 million. And over the year, as I touched on there, we had an increase in our average working capital investment and consequently, our average debt. Working capital investment was largely driven by the higher pricing of inventory as a result of the increase in commodity pricing, but also some early inventory purchase in advance of CBAM implementation in the EU on the 1st of January and to mitigate some of the supply challenges that we saw as a result of the conflict in the Middle East. This investment ensured that our customers avoided any supply interruption during the key application windows. We also made payments in the year of EUR 5.1 million relating to previously withheld amounts due to sanctioned parties, which now closes off all those previously withheld supplier balances. Overall, our ROCE for the year at 10.9% is below our target of 12% to 15% and the key driver being the higher average working capital over the year as discussed. As when we look at our ROCE, we look at ROCE using an average working capital for the year as opposed to our year-end position. FY '26 then, as Sean touched on, was the final year of our 5-year strategy cycle as previously presented at our 2022 Capital Markets Day. And I'm happy to report that we beat our operating profit target with total operating profit over the 5 years of EUR 474 million against our target of EUR 415 million. And this represents growth in the 5-year profits of 44% against our previous 5 years. Our free cash flow delivery was also strong with total free cash generation of EUR 324 million, which was in line with our ambitious target back in 2022. We continue to pursue a disciplined approach to capital allocation with balance across investing in growth and returning cash to our shareholders. Achievement of our cash generation target over this 5-year period has allowed us to invest to deliver on our promise to shareholders with the completion of the EUR 80 million share buyback program and average annual dividend payout ratio above 35%. In total, we've returned EUR 172 million to shareholders over the period, which is approximately 40% of our market capitalization today. Strong cash generation has allowed us to invest EUR 99 million in our diversification strategy, which does include final payments in respect of our LATAM agricultural business, which we acquired in 2018, but also to support the organic growth in our Living Landscapes business with selective M&A, and this has allowed us to grow the contribution from Living Landscapes from 7.4% of operating profit in 2022 to just under 20% in FY 2026. We've also invested in the organic growth of the business with EUR 124 million spent over the 5-year period to expand our capacity and our capability across the regions, invest in research and development, health and safety and in technology for the future with investments in a new ERP platform in Ireland and the U.K. and in expanding our digital capabilities to customers. We're well positioned to support the future growth of the business. However, with increased working capital demands and a higher interest rate environment, we continue to monitor capital allocation and continue to focus on managing our working capital. We will update our capital allocation strategy and new 5-year ambitions at our Capital Markets Day on November 17. Finally, for our shareholders in the current year, we're proposing a final dividend of EUR 0.1415, which will bring our full year dividend to EUR 0.1730, which is in line with last year and above the 35% payout ratio that we outlined at the last Capital Markets Day. I'll now hand back to Sean.

Thanks, Colm. So from a strategic perspective, I think what you can see there is that the business has really moved to a different level compared to where it operated at from the previous 5-year period. The average group operating profit over the last 5 years, including contribution from the joint venture businesses, has been at over EUR 100 million on average across the period. And that compares very favorably to an average of about EUR 70 million over the previous 5-year period. The low point for total group operating profit in this 5-year period was EUR 89 million, which was the high point in the previous 5-year period. So we've produced more consistent, higher average profitability in this 5-year period. Living Landscapes now represents 20% of the group operating profit and at a higher margin and lower capital employed level, increasing Living Landscapes' contribution to overall group operating profit can only be positive for the dynamics financially within the group. The Ireland U.K. businesses are a smaller, more consistent profit contributor within the overall picture. And CEE, LATAM, and our Living Landscapes businesses provide greater balance overall to the portfolio of assets that we have. And we're extremely well invested now. So the business has invested significantly in plant, in facilities. Just in the last 12 months, we bought additional land beside our 2 Brazilian production facilities and our main Polish manufacturing facility to allow for additional expansion. We've invested in research. We've invested in our digital tools and solutions, invested in biological manufacturing capability from an organic perspective with our first investment in Brazil, and we continue to invest in nature-based solutions. The markets are continuing to evolve, though, and the complexity that our landowners and our customers are seeing is increasing the value of the specialist knowledge, the product and the services that we're offering. And we're beginning to tie together solutions from various parts of our businesses. So recent examples of that, for example, are where golf courses are now building irrigation lagoons to try and wean themselves off dependency on local natural water supplies from water authorities. We're involved in the construction of those lagoons, bringing together our OAS teams, our digital teams who can provide advice on the best location for those lagoons and the construction of the lagoons ourselves using our Keystone Habitats business and some of the products that are involved in that. There are plenty of examples now of us beginning to tie together the solutions and capabilities that we have across the group, which will drive additional synergies as the business continues to grow. We're well positioned for the next phase of growth, continue to have strong and leading market share positions. And as we mentioned earlier on, we are seeing continued challenges from the competition in the market going out of business, which essentially means that there's a migration to quality and a migration to some of the larger players within the competitive dynamic. We continue to push for technical differentiation of product. So whether that's higher-margin products within our BAM portfolio, differentiated seed offerings, differentiated crop protection offerings, controlled release fertilizers and higher quality blended nutrient fertilizers that essentially replace the lost nutrients in the soil rather than just applying straight nitrogen to grow a crop. The business is very much focused on differentiating ourselves from our competition through higher value add. We continue to scale our Living Landscapes business through both organic growth, integration at the back end and driving for commercial synergies between the businesses after we've acquired them. And we're continuing to identify pockets of services and pockets of solutions where complementary M&A will add value to the overall Living Landscapes business. So the next 5 years will be about converting that growth into value, continuing to grow our cash generation, continuing to see enhanced returns. We should have lower CapEx over the coming 5 years given our heavy investment in ERP and facilities over the last 5 years and continuing to drive capital efficiency across the group. So our Capital Markets Day in Craven Cottage on the 17th of November, will speak to strategy, some of the growth opportunities that we see out ahead, our overall financial ambitions for the group and how we intend to allocate capital over the coming 5-year period. So to summarize, our FY '26 performance has demonstrated the strength, the diversity of the group and the capability of all of the management team, and I must thank all of the management team who have delivered a very strong result in what have been very challenging circumstances, both from a supply perspective and in terms of the challenges that we're facing on farm. Our 5-year operating profit ambition has been exceeded significantly, and we've overdelivered in that regard. We continue to generate strong cash, which is supporting our investment in the business and shareholder returns at an overall level. And we believe the platform that we have right now is very well invested for the next phase of value creation for shareholders and for the group as a whole. So we look forward to seeing investors, if not on the Capital Markets Day on the 17th of November on the road over the next few days, and we continue to be happy to engage with investors and explain our story to them. And hopefully, we're beginning to show and evidence that the management team that are in place now are delivering on the commitments given around the '22 Capital Markets Day. So that concludes our call.

[Operator Instructions] The next question comes from Patrick Higgins from Goodbody.

One question on Agrii, please, and then maybe one on Living Landscapes, if that's okay. Firstly, just on Agrii. Obviously, we've seen a much improved kind of output price backdrop since the year-end, which obviously should be supportive, but it has to be balanced against still kind of elevated input cost environment. So just interested to hear how you're -- how we should think about farming -- farmer sentiment across your key regions, I guess, versus this time last year at the start of [ this ]. And have you seen any kind of notable differences in planting intentions across the regions for the year ahead? And that's Agrii. And then on the Living Landscapes, how should we think about the pace? And obviously, you have the CMD coming up, so maybe you'll hold fire until then. But how should we think about the M&A activity over the next kind of 12, 24 months ahead, given your comments on the strength of the pipeline? And have you seen any changes in valuation expectations, either kind of bolt-on acquisitions or larger kind of platform opportunities that you might be looking at across Continental Europe?

Thanks, Patrick. I'll take the agriculture one and maybe TJ will answer the Living Landscapes one. So yes, I mean, you're right, farm sentiment has improved over the back end of the summer. The return of rain was important and harvest was concluded pretty early right around our businesses, and the lift in wheat prices, oilseed prices generally has been a positive. And I would say farm sentiment is improving and has improved significantly in the early part of this year. Not really seeing any change in planting at this point in time. We do expect in the U.K. a bigger overall oilseed rape area because oilseed rape was one of the crops that performed very well last year despite the very dry conditions. So a continued return back to a higher oilseed rape planted area, which is a positive for us. Winter wheat, we think will probably be in line, maybe slightly ahead of last year in the U.K. And the indications are at this early stage that Poland and Romania will continue to move towards greater winter cropping. We mentioned that dynamic earlier on and the kind of trend over the last 3, 4 years has been higher levels of autumn/winter planting and lower levels of spring planting in those markets. Brazil, I understand the soy area is expected to be about 3% or 4% higher than last year. And again, soy prices have moved upwards. So farm sentiment in Brazil is improving. And finally, then from an animal feed perspective, while dairy prices have been lower over the last 12 months, we did see dairy prices begin to tick up as the summer went on and as the year went on. And it looks like the short-term trend will be slightly upwards, although not at the higher levels seen at the end of 2025 calendar year. So broadly speaking, I would say that the -- where fertilizer prices have landed, where raw material prices have landed, that's driving to an extent, a lift in commodity prices from a grain and oilseed perspective and perhaps from a milk perspective and the risk of El Niño, the risk of reduced cropping, the actual outturns for summer '26 harvest. The French maize area, I think, was 42% lower year-on-year. So there has been significant deterioration in harvest outcomes as a result of the very dry conditions experienced last winter. And that's underpinning and supporting higher prices in grain markets for the coming year. So sentiment is improving, I would say, Patrick. Does that cover all of the agricultural part of the question? You mightn't have mic on. So TJ, go ahead, sorry, with the Living Landscapes part.

Sure. Thanks, Patrick. Again, as you will know, kind of predicting with any degree of certainty, the timing on M&A is difficult just by virtue and nature of the M&A processes themselves. That said, what I would say is that our M&A hopper is active. We have moved into various stages of diligence across a number of businesses. I would say in terms of the kind of profile of those businesses, we have been looking at the smaller scale ones. We're also looking at some larger ticket ones. So smaller being in the EUR 1 million to EUR 5 million EBITDA range and the larger being north of EUR 5 million EBITDA range. So I would say a healthy hopper progressing well, but I won't be predicting the timing because that is just not a predictable piece, but certainly confident and, I would say, in a healthy shape relative to the last number of months. In terms of multiple expectations, I would say, again, break it between the smaller ticket acquisitions where it's typically owner-managed, family-owned type of businesses where multiple expectations there would have remained relatively consistent, I would say, over the years. Even as you get into the larger businesses, I would say, over the last kind of 12, 18 months, multiple expectations haven't increased. We would see them as generally have been flat to maybe softening in some cases, and that's possibly in part due to interest rate movements and increases. But yes, nothing significantly different, I would say, in terms of overall multiple expectations over the last 12 to 18 months, I would have said.

The next question comes from Adam Tomlinson from Berenberg.

Hopefully, you can hear me okay.

Yes, we can, Adam.

Great. Okay. Great. Three questions, if I can. Just on -- in the U.K. and Ireland and other territories for that matter, you spoke a little bit about some improvement in farming sentiment. But I'm just interested in any color you can give on the consolidation trend you're seeing within your customers and maybe how that's impacting you and how you think that plays out? That's the first question. The second question was just on the Living Landscapes division. Just delving into the detail a little bit there. You mentioned the sports area, delivering a good performance despite tough markets. I'm just wondering, is that perhaps an area where adverse or challenging weather conditions perhaps allow you to step in a bit more and help people out? Does that give a bit of counterbalance in terms of performance? And then just third question is just on cash management. So strong net debt position for the year-end ahead of what we were expecting despite some working outflow. I'm just wondering how to think about working capital perhaps in the year ahead and just from a modeling perspective? That's the third question.

Thanks, Adam. Colm, do you want to go ahead first?

Yes. Yes. Look, the year-end finished very strong, probably ahead of our expectations, to be honest, given some of the markets were quite challenged, as we touched on earlier on, as regards farmer affordability and spend patterns in the year. So we had a very strong cash collection in July, which would typically be our strongest month for cash collection anyway, but probably ahead of our expectations. And certainly, our net debt position was good at the end of the year. Looking forward to next year, it's difficult to predict. But I think when you look at where prices are right now as regards to raw materials, and we've got CBAM coming in, in the U.K. with some of the timing around year-end, we probably will see a small outflow next year in working capital. But as I said earlier on, that's an area that we're looking on to manage over the year. And really, it's looking at the average over the year and how we can contain that and manage that effectively, particularly with interest rates likely to rise over the coming year or 18 months.

Thanks, Colm. From a consolidation or customer perspective on the agriculture side, some of the challenges that the U.K. farmer is facing, I suppose, was the inheritance tax issue. So there are certainly moves to exit farming via sale rather than transition farming from generation to generation. That's around the edges. Really, what we're seeing though is more consolidation in Continental Europe and also in Latin America. So a lot of the smaller distributors, regional distributors in Romania, in Poland and to a certain extent in Latin America going out of business or using credit arrangements and creditor arrangements, sorry, court-ordered arrangements to wind up their businesses. So really a flight to quality from a distributor perspective seems to be to what we're seeing. So minor consolidation, I would say, at farm level, although that's a feature always in this business and has been for the last 20 years, continued farm consolidation, but really more opportunity within our competitor space to win business and grow market share because competitors are significantly challenged. I think we're the only distributor of agrochemicals in the U.K. who made a profit in the last 12 months. So that will give you some indication of the level of challenge that's been experienced by our competitors in the U.K.

And Adam, just regarding your question on sports business, yes, clearly, the very dry, arid conditions over the summer negatively impact the kind of absorption characteristics for nutrition products onto the soil for herbicides and pesticides. That said, what we do see is that it presents opportunity around our irrigation solutions and also on certain product ranges such as wetting agents. But net-net, that very dry period is a negative for the business. But what we do see is that as we entered the early autumn period, there's a lot of recovery work that starts to happen, whether it's golf courses, football pitches, cricket grounds, et cetera. And we see a real bounce in activity through September when conditions start to improve. So certainly, we do see recovery, and we will see recovery over the coming month or so as ground staff look to renovate pitches that have been damaged over the winter period. So that's just the nature of the business, I suppose. But net, as I said, a challenge when it's very dry, but recovering well over early autumn.