The big news from Genus (GNS) this year was the long-awaited launch of its selective breeding technology, Sexcel, which heightens the chance of cows producing female offspring. The product had been tied up in a patent dispute with a collection of US rivals, but in April Genus won a major victory removing contractual barriers to a commercial launch. Although that came after the financial year-end (and has therefore had no impact on these numbers), management is optimistic about the global demand among farmers, particularly in India – the world’s largest dairy market.
Already, Genus’s bovine division has started to recover after a tough few years in the dismal milk market. On an underlying basis it reported a 2 per cent increase in revenue, which helped narrow the pre-tax profit decline to 13 per cent, from 30 per cent in the financial first half. The pig business has also had to contend with difficult conditions in recent years but again reported solid revenue growth, particularly in Asia.
Statutory profit comparisons were clouded by pension-related exceptional gains last year, but even on a like-for-like basis pre-tax profit was flat – strong underlying revenue growth was offset by a 12 per cent increase in research and development spending. However, these costs are expected to ramp up again in the year to June 2018. Bloomberg consensus forecasts are for adjusted pre-tax profit of £61.8m (from £56.4m in FY2017) and EPS of 72.4p.
| GENUS (GNS) | ||||
| ORD PRICE: | 1,932p | MARKET VALUE: | £1.18bn | |
| TOUCH: | 1,931-1,934p | 12-MONTH HIGH: | 2,113p | LOW: 1,652p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 652p* | NET DEBT: | 28% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 345 | 33.4 | 38.8 | 16.1 |
| 2014 | 372 | 38.2 | 47.7 | 17.7 |
| 2015 | 399 | 57.8 | 65.7 | 19.5 |
| 2016 | 388 | 60.9 | 81.1 | 21.4 |
| 2017 | 459 | 40.7 | 53.8 | 23.6 |
| % change | +18 | -33 | -34 | +10 |
| Ex-div: | 16 Nov | |||
| Payment: | 1 Dec | |||
| *Includes intangible assets of £193m, or 315p a share | ||||
