- Revenues up 2% despite challenging market conditions
- Excluding China pig market, pre-tax profit up 25%
- Early signs of recovery in Chinese pig pricing
Animal genetics company Genus (GNS) delivered a resilient full-year performance in the face of challenging market conditions in China, the world’s largest pig market.
Group revenues for the fiscal year ended 30 June were 2% higher to £593.4 million, slightly ahead of market expectations. Adjusted pre-tax profit fell 18% in constant currencies, impacted by an 84% drop in China.
Excluding the Chinese pig market, group revenues grew 7% while pre-tax profit increased 25% year-on-year in constant currencies.
Robust trading outside China and signs of a more concerted recovery in Chinese pig prices during the summer was well received with the shares gaining 15% to £27.50.
The shares have dropped around 60% over the last year as the company flagged the difficult trading conditions in China.
EARLY SIGNS OF RECOVERY
The Chinese market looks to be on the recovery path with pig prices rising above 21 RMB (renminbi) per kilogram over the summer. RMB is the official Chinese currency renminbi.
A fall in prices makes pig production less viable, which weighs on near-term demand for Genus’ genetic products.
On average prices fell 50% in the 2021 fiscal year to around 15 RMB/Kg, putting pressure on farmers and reducing demand for Genus’ genetics.
Industry expectations are for prices to remain around current levels for the rest of 2022, rebuilding farmers’ confidence and profitability.
Genus invested in the pig supply chain through the crisis to support farmers and benefit from the expected recovery.
The company’s medium-term target is to increase operating profit by 10% per year.
In bovine (dairy and beef genetics) revenues increased by 7% in constant currencies and adjusted pre-tax profit grew 9% to £40.5 million.
Genus maintained the final dividend at 21.7p per share taking the full-year payout to 32p per share, the same as the prior year and covered 2.6 times by adjusted earnings.
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