Last year's terrible weather - severe drought in the US and a deluge in Europe - meant many beef, dairy and pork farmers held off updating their herds. True, the resulting disruption to semen and genetics supplier, Genus (GNS), isn't new. But management's belief that a recovery won't really start before the second half of 2014's fiscal year was more surprising - that helped the shares slide 9 per cent on the back of these full-year figures.
Operationally, the fall in reported profits reflected a change in the fair value of Genus' current stable of breeding bulls. This meant a £9.3m write-down in its beef and dairy assets, though pigs were more robust and gained £4.4m in value. Strip these costs out and underlying pre-tax profit increased by a lacklustre 2 per cent year-on-year to £47.2m. This reflected tough market conditions in North America and Brazil where the Genus ABS bovine division caught the worst knock-on effects of both drought and high feed prices - operating profit here fell by an underlying 3 per cent to £22.8m. High pig volumes in Asia, where profits rose 13 per cent to £12.3m, couldn't offset that underlying trend.
Broker Peel Hunt has cut its forecasts by 7 per cent and now expects pre-tax profit of £51m for 2014, giving EPS of 58.1p (from 55p in 2013).
GENUS (GNS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,348p | MARKET VALUE: | £817m | |
| TOUCH: | 1,345-1,348p | 12-MONTH HIGH: | 1,609p | LOW: 1,271p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 495p* | NET DEBT: | 18% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 | 65.9 | 14.6 |
| 2013 | 345 | 38.1 | 44.7 | 16.1 |
| % change | +1 | -30 | -32 | +10 |
Ex-div: 16 Nov Payment: 6 Dec *Includes intangible assets of £136m, or 225p a share | ||||
