REG - Genus - Trading Update

GenusAnnouncement

16/05/2023 07:00

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RNS Number : 4782Z  Genus PLC  16 May 2023

 
 

Immediate release
 
 
       16 May 2023

Genus plc

('Genus' or the 'Group')

 

TRADING UPDATE

 

Genus (LSE: GNS), a leading global animal genetics company, publishes the
following trading update for the period from 1 January 2023 to 30 April 2023,
and revised outlook for the 2023 fiscal year.

Trading Update

During the period under review Genus achieved good trading in its porcine
business, with the exception of China, where the market conditions have been
very challenging.  Overall, in the four months to 30 April 2023, PIC achieved
strong volume and royalty revenue growth, and good operating profit growth.
North America, Latin America and Europe all delivered strong growth in
operating profit, whilst Asia experienced a decline in operating profit due to
the performance in China.

Since December 2022 the Chinese porcine market has been weak, reflecting high
supply of slaughter pigs following widespread African Swine Fever ('ASF').
Expectations of a recovery in the market grew during February 2023, when the
pig price rose from a low of 14.1 RMB/kg to 15.9 RMB/kg on 2 March.  However,
since then the pig price has fallen back below 15 RMB/kg and is currently 14.3
RMB/kg, with continued widespread ASF outbreaks and subdued demand. At these
prices, producers are unprofitable, and many are not replacing and rebuilding
their sow herds at the current time. Due to the volatile porcine market PIC
China's trading has been weaker than the first half of the fiscal year,
achieving lower revenues, with operating profit also impacted by costs
associated with the clearance of inventory at two PIC farms that were infected
by ASF in the period.

The bovine business saw better trading than in the first half of the fiscal
year, with good volume and revenue growth in North America, Europe and Asia.
Market conditions remained challenging in Brazil, however all regions achieved
operating profit growth. ABS's revenue and profitability was better than prior
year due to the growth achieved in sexed volumes as well as price increases.

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. Our PRRSv-resistant pig programme has made further
positive progress.  An important milestone was the final animal testing for
the US FDA, which was successfully completed this month.  Genus now expects
to complete final submissions to the US FDA over the summer, slightly ahead of
the previous timeline.

Outlook

Market researchers are currently anticipating a recovery in the China porcine
market in the summer as the supply decreases and consumer demand for pork
continues to increase, but there is uncertainty as to the timing of when the
demand for porcine genetics will improve.

Due to the challenging porcine market conditions in China, we now expect PIC
China to be modestly loss making in the second half of the year, which
compares with a profit of £8.8 million delivered in the first half of the
year.  Consequently, the Board anticipates that the Group's profit before tax
will now be lower than its previous expectations for the full year.

Despite this the Board remains confident that due to the investments made PIC
China remains well positioned to take advantage of the recovery and capture
the growth opportunity as it develops, and that the Group's strategy to
commercialise the PRRSv-resistant pig is one of many opportunities ahead for
Genus.

The Group expects to announce its preliminary results for the year ending 30
June 2023 on 7 September 2023.

 

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)

Regulatory Notes

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.  The person responsible for making this announcement on behalf of the
Group is Dan Hartley (General Counsel and Company Secretary).

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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