Genus first-half profit hurt by declining pig prices in China

(Alliance News) - Genus PLC shares fell on Thursday after the firm reported lower interim revenue and profit due to reduced revenue in its Chinese PIC business and warned its second half will take a hit.

Shares were down 5.5% at 2,988.00 pence each on Thursday afternoon in London.

For the six months to December 31, the Basingstoke, Hampshire-based producer of biotechnology products for cattle and pig farmers posted a pretax profit of GBP24.4 million. This was down 35% from GBP37.4 million in the same period a year before.

Adjusted pretax profit declined 21% to GBP37.0 million from GBP47.1 million .

Revenue in the period fell 2% to GBP281.2 million from GBP285.7 million, year-on-year.

Genus blamed this on porcine market conditions in China. This led to a 4% decrease in revenue for PIC China, its porcine genetics business in the country. Genus said live pig price in China has remained below cost of production into January.

"Without PIC China, adjusted profit before tax would have grown by 28% in constant currency, due to robust growth across the rest of the group and prudent cost management," Genus stated.

Separately, Genus said it was expanding its Canadian business by acquiring the porcine genetics business of Olymel LP, AlphaGene, for CAD25 million and signed a strategic collaboration.

The collaboration combines PIC's expertise in porcine genetic improvement with Olymel's porcine production facilities, enabling Olymel's customers to benefit from improved AlphaGene health, efficiency and breakthrough technologies, Genus explained.

Genus' interim dividend remained flat at 10.3 pence per share.

Looking ahead, Genus expects that the China porcine market will continue to hamper its performance in the second half of financial 2022. It explained that this is due to uncertainty as to when and for how long pig prices and the overall porcine market will recover. However, its medium-term growth expectations remain unchanged.

By Abby Amoakuh; abbyamoakuh@alliancenews.com

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