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Genus suffers in Asia

Animal genetics supplier Genus reported mixed results for 2014, with a poor performance in China offsetting growth elsewhere.
September 3, 2014

There are three things Genus (GNS) chief executive Karim Bitar wants you to know: that the company hasn't performed well in China, that it's performed well everywhere else, and that global trends for the animal genetics supplier are improving.

IC TIP: Hold at 1,144p

Mr Bitar admitted these annual results were "mixed", mainly as a result of sliding profits in Asia, specifically China. The Chinese porcine market didn't fare well in the first half of the year, with squeezed pork prices dragging down demand for Genus's products. Yet Mr Bitar remains "cautiously optimistic": the price of pork in China has now returned to break-even level, and a new agreement with Riverstone - the first such deal for Genus in China - will help build Genus's capacity while limiting upfront investment and exposure to volatile commodity prices.

In spite of ongoing currency headwinds - which Mr Bitar told us were "purely translational" - trading elsewhere has been robust. Last year, the core porcine business (which excludes Asia) grew profits by 10 per cent, and the bovine division delivered 12 per cent growth at constant currencies. This was driven by strong trading in Latin and North America, despite the spread of an epidemic diarrhoea virus in pigs.

Brokerage Numis expects pre-tax profits of £42.1m for the current financial year, giving EPS of 48.5p (up from £39.3m and 46.5p in 2013-14).

GENUS (GNS)

ORD PRICE:1,144pMARKET VALUE:£697m
TOUCH:1,141-1,148p12-MONTH HIGH:1,453pLOW: 925p
DIVIDEND YIELD:1.5%PE RATIO:24
NET ASSET VALUE:467p*NET DEBT:22%

Year to 30 JuneTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201028540.846.312.1
201131040.849.013.3
201234254.465.914.6
201334533.438.816.1
201437238.247.717.7
% change+8+14+23+10

Ex-div:20 Nov

Payment:05 Dec

*Includes intangible assets of £134m or 221p per share