REG - Genus - AGM Trading Update

GenusAnnouncement

23/11/2022 07:00

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RNS Number : 2684H  Genus PLC  23 November 2022

 
 

Immediate release
 
                   23 November 2022

Genus plc

('Genus' or the 'Group')

 

AGM TRADING UPDATE

 

Genus (LSE: GNS), a leading global animal genetics company, publishes the
following trading update for the period from 1 July 2022 to 22 November 2022,
to coincide with its AGM at 11:00am GMT this morning.

In the period under review Genus saw good trading in the porcine business,
with strength and market share gains in North America and improved trading in
China, whilst the bovine business faced more challenging market conditions
particularly in LATAM and EMEA.

In the four months to 31 October 2022, PIC's volumes and revenue were higher
than the prior year.  Royalty revenue achieved strong growth, including in
China.  Since September the Chinese porcine market has continued to recover
with the live pig price remaining above 22 RMB/kg and currently being
approximately 24 RMB/kg.  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.

In the period ABS's overall volumes were unchanged compared with prior year,
although revenue growth was achieved due to price increases and changes in
product mix. Sexed and beef volumes continued to grow, while conventional
dairy volume declined markedly.  Volume growth was impacted by weaker market
conditions, principally in LATAM and EMEA.  In LATAM producers experienced
inflationary cost pressures and reduced their demand for dairy and beef
genetics, particularly in Brazil.  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.

Genus continued to make good progress towards its strategic objectives with an
increase in R&D investments as planned, supporting the long-term growth
prospects of the Group.  As expected, finance costs were higher due to higher
debt year on year and the rise in interest rates, while foreign exchange
translation was a benefit to performance due to weaker sterling.

As expected, there was a seasonal net cash outflow in the period, while net
debt of the Group at the end of October 2022 was higher due to US dollar
denominated debt being translated at a weaker sterling exchange rate.

Outlook

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.

The benefit of favourable exchange rates is expected to be largely offset by
higher interest costs in the year.

Overall, the Group's profit before tax is currently anticipated to be in line
with the Board's expectations for the financial year 2023, albeit with
performance weighted to the second half.  The Board remains confident in the
Group's strategy and the many opportunities ahead for Genus.

 

 

For further information please contact:

 Genus plc                                  Tel: 01256 345970
 Stephen Wilson, Chief Executive Officer
 Alison Henriksen, Chief Financial Officer
 Buchanan                                   Tel: 0207 466 5000
 Charles Ryland /Chris Lane/Verity Parker

This announcement is available on the Genus website www.genusplc.com
(http://www.genusplc.com)

About Genus

Genus creates advances to animal breeding and genetic improvement by applying
biotechnology and sells added value products for livestock farming and food
producers. Its technology is applicable across livestock species and is
currently commercialised by Genus in the dairy, beef and pork food production
sectors.

 

Genus' worldwide sales are made in over seventy-five countries under the
trademarks 'ABS' (dairy and beef cattle) and 'PIC' (pigs) and comprise semen,
embryos and breeding animals with superior genetics to those animals currently
in farms. Genus's customers' animals produce offspring with greater production
efficiency, and quality, and use these to supply the global dairy and meat
supply chains.

 

The Group's competitive edge has been created from the ownership and control
of proprietary lines of breeding animals, the biotechnology used to improve
them and its global supply chain, technical service and sales and distribution
network.

 

With headquarters in Basingstoke, United Kingdom, Genus companies operate in
over twenty-five countries on six continents, with research laboratories
located in Madison, Wisconsin, USA.

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