Genus PLC on Wednesday said pork prices have picked up, though it warned on the threat of weaker demand due to ongoing Covid-19 restrictions in China.
Genus, which produces biotechnology products for cattle and pig farmers, said its porcine business achieved market share gains in North America. Trading also improved in China, a key market for the pork business.
The cattle-focused bovine unit ‘faced more challenging market conditions’, however, particularly in Latin America and the Europe, Middle East & Africa region.
In the PIC porcine unit, volumes and revenue in the four months to October 31 were higher year-on-year.
The Chinese porcine market has recovered recently, and the live pig price is at around CNY 24 per kilogramme, Genus said. ¥24 is about £2.82.
‘At current prices, producers are profitable, and we anticipate this should lead to improved confidence for producers to replace and rebuild sow herds over time. However, Covid restrictions in China present continuing challenges for businesses and consumers, impacting demand for pork. The investments made in PIC China’s supply chain will support demand for PIC’s elite genetics as the market recovers and further growth of large-scale producers continues over time,’ Genus said.
In the ABS cattle genetics arm, volume growth was weaker due to falling demand, as producers in Latin America faced cost pressure.
‘EMEA similarly saw reduced demand in certain distributor markets. ABS’s profitability was lower in the period, impacted by higher costs including travel, in particular fuel costs, and manufacturing costs per unit arising from lower production volume levels,’ the company said.
Looking ahead, Genus expects annual pretax profit in line with board expectations. It said favourable foreign exchange rates will be offset by higher interest costs.
‘While market conditions in bovine have been challenging, porcine has performed well in the first four months. Pig prices in China remained at a profitable level for producers, which we anticipate will lead to improved demand for porcine genetics in the second half of financial year 2023. Although Covid restrictions in China continue to be a headwind to a recovery in demand, PIC China remains well positioned to capture the growth opportunity as it develops,’ Genus added.
Genus shares were 2.8% lower at 3,018.00 pence each in London on Wednesday morning.
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