Agriculture is being buffeted by many headwinds at the moment as drought in key cereal producing countries threatens to drive up costs for dairy, pig and beef farmers, proving the truth of the old farming adage "Up with the corn, down with the horn." That may affect suppliers to farmers such as semen specialist Genus, but on the evidence of these results, the company can rely on booming Asian markets to maintain sales growth.
In the latest trading period, sluggish trading, particularly in Europe, was more than offset by much higher growth rates in emerging markets. Asia is especially important as Genus has recently ventured into the Chinese pork market; higher pig volumes, combined with stable dairy prices, meant Asian underlying operating profits rose over 40 per cent to £11.1m on turnover up a similar amount to £48.9m. The region now accounts for a fifth of group profits.
That contrasted with Europe, where a tough market for pork, caused in part by EU changes to welfare standards, meant revenues and profits increased by only 4 per cent to £117m and £18.9m, respectively. In the US, corn price rises affected customers the most during the final quarter, but better overall farm profitability meant operating profits rose 11 per cent to £39.5m.
Broker Peel Hunt forecasts current year adjusted pre-tax profits of £51m and EPS of 56.3p (2012: £46.5m and 53.5p).
GENUS (GNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,336p | MARKET VALUE: | £806m | |
| TOUCH: | 1,335-1,337p | 12-MONTH HIGH: | 1,467p | LOW: 908p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 457p* | NET DEBT: | 20% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 247 | 22.0 | 24.7 | 10.0 |
| 2009 | 280 | 26.2 | 30.4 | 11.0 |
| 2010 | 285 | 40.8 | 46.3 | 12.1 |
| 2011 | 310 | 40.8 | 49.0 | 13.3 |
| 2012 | 342 | 54.4 | 66.0 | 14.6 |
| % change | +10 | +33 | +35 | +10 |
Ex-div: 7 Nov Payment: 23 Nov *Includes intangible assets of £137m, or 227p a share | ||||
