Rising research and development costs sent half-year adjusted pre-tax profit down a tenth at animal genetics group Genus (GNS). Top-line growth wasn't as good as first thought, either. Although group revenue rose 3 per cent at constant currencies, performance at the ABS bovine business fell short of management's expectations.
More than two years of depressed milk prices have created a tough environment for Genus's cow division. Lower volumes, revenue and margins sent adjusted operating profit there down 30 per cent at constant currencies. But chief executive Karim Bitar thinks the appointment of lifelong dairy specialist Nate Zwald as commercial director of the division will spark a reversal in fortunes. That, and the acquisition of cow genetics company De Novo, has given management confidence the division will soon return to growth, even if markets remain challenging.
Pigs are performing better for Genus. The porcine division - which contributes 55 per cent of group revenue - benefited from particularly strong growth in China, where markets are strong and Genus's products are gaining traction. Overall porcine adjusted operating profit rose 9 per cent at constant currencies.
Broker Peel Hunt expects adjusted pre-tax profit to rise to £57m in the year to June 2017, while adjusted earnings per share are forecast to fall to 64.8p (from £51.9m and 65p, respectively, in FY2016).
GENUS (GNS) | ||||
---|---|---|---|---|
ORD PRICE: | 1,773p | MARKET VALUE: | £1.08bn | |
TOUCH: | 1,767-1,773p | 12-MONTH HIGH: | 2,113p | LOW: 1,323p |
DIVIDEND YIELD: | 1.2% | PE RATIO: | 23 | |
NET ASSET VALUE: | 654p* | NET DEBT: | 28% |
Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2015 | 188 | 12.9 | 17.4 | 6.7 |
2016 | 222 | 11.4 | 13.3 | 7.4 |
% change | +18 | -12 | -24 | +10 |
Ex-div: 2 Mar Payment: 31 Mar *Includes intangible assets of £184m, or 301p a share |