Shares in Genus had risen 30 per cent in the month leading up to its half-year results, but slumped 19 per cent on the day after the company failed to deliver the earnings upgrade the market had been expecting, and threw in a few unpleasant surprises for good measure.
While, on the surface, a 24 per cent rise in underlying profit before tax looks respectable, this performance was largely driven by exchange rate benefits. Measured at constant currencies, pre-tax profits grew by a meagre 1 per cent, with Genus blaming weakening US milk prices, high feed prices, and the difficulties faced by farmers in raising finance to expand. Chief executive Richard Wood says he expects the trading environment in the second half to remain difficult, although he expects continued growth in emerging markets such as Latin America and China.
Another surprise was the sudden departure of finance director Martin Boden, who will be replaced with immediate effect by non-executive director John Worby. However, as a former finance director of Unigate Dairies, Mr Worby appears to be a suitable replacement.
KBC Peel Hunt expects profit before tax in fiscal 2009 of £33m and EPS of 36.3p.
| GENUS (GNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 622p | MARKET VALUE: | £370m | |
| TOUCH: | 622-629p | 12-MONTH HIGH: | 955p | LOW: 587p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 386p* | NET DEBT: | 43% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 120 | 7.3 | 8.4 | nil |
| 2008 | 140 | 17.9 | 19.2 | nil |
| % change | +16 | +145 | +129 | |
* Includes intangible assets of £167m, or 281p a share | ||||
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