Animal breeding and genetic improvement company Genus (GNS) reported strong first half results for the period ended 31 December with revenues 13% higher to £271m (consensus £259m) and record adjusted profit before tax up 27% to £30.4m. The shares gained 0.8% to £32.40 against a negative market backdrop.

Chief executive Stephen Wilson commented, ‘Genus continues to have significant opportunities for growth, as we execute our strategy to remain at the forefront of delivering porcine, dairy and beef genetic improvement to farmers globally.’

Broker Liberum commented, ‘Genus has reported 1H profits 20% ahead of our forecasts and in normal circumstances this would drive full-year estimate upgrades.’

CHINA RE-STOCKING

Porcine revenues were driven 15% higher to £146.5m due to restocking in China following the decimation of pig herds from African swine fever. (ASF) Profit in Asia was up almost 300% from strong breeding stocks sales and higher margins in China.

Business was buoyant across the globe resulting in operating profits of £62.6m, up 28%.

The company’s office in China has been closed for the first few weeks of the year and only re-opened last week, while it has not been possible to move livestock around due to closed roads.

STRONG LIKE BULL

Bovine experienced strong revenue growth (10%) lifting sales to £118m while adjusted operating profits were up 17% to £14.6m. The company recorded continued success for its Sexcel product (delivers more pregnancies in herds) with volumes expanding by 56%.

This reflected the increased use of beef genetics in dairy herds and the move to long-term partnership accounts rather than transactional selling.

Research and development expenditure drives the company’s future success and reassuringly, spending increased by 24% to £31m in the first half.

This allowed Genus to expand its elite porcine herds across the globe, increasing herd sizes by 30%.

Genus also increased spending into on gene editing (up 39% to £4.3m) with the investment in the PRRSv resistance project.

OUTLOOK

While the spread of coronavirus has the potential to disrupt trade, management anticipates meeting earnings expectations for the full-year. Refinitiv data shows analysts’ have pencilled in revenues up 6.6% to £520.6m and pre-tax profit of £66.7m, up 13%.

The dividend was increased 6% to 9.4p.

READ MORE ABOUT GENUS HERE

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Issue Date: 27 Feb 2020