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Genus faces down challenges

The animal genetics specialist has done well to deal with challenging markets
Genus faces down challenges

Animal genetics specialist Genus (GNS) should be commended for these ultimately resilient half-year numbers. While a 2 per cent rise in adjusted pre-tax profits (at constant currency and excluding amortisation costs and share-based payments) to £29.2m doesn’t signal dramatic growth, it was achieved despite an African Swine Fever (ASF) epidemic in China, tough comparative figures and higher research and development (R&D) costs.

IC TIP: Hold at 2,180p

Chief executive Karim Bitar credited a recovery in the bovine business for driving healthy volume growth and offsetting persistent challenges in the porcine division. As for the ASF outbreak in China, Mr Bitar thinks the epidemic could still bode well for the group in the medium term. As pig herds continue to be "knocked out" by the virus, pork prices should rise while demand for pig imports from the US, Europe and Brazil – all territories in which Genus has a meaningful presence - increases. Be warned, says Mr Bitar, the second half will still be challenging in this respect. But "better progress" from higher prices and imports should start to show up in the group’s financial figures from FY2020.

Broker Peel Hunt expects pre-tax profits of £62.5m for the year ending June 2019, giving EPS of 73p, compared with £59.5m and 76.2p in FY2018.

GENUS (GNS)    
ORD PRICE:2,180pMARKET VALUE:£ 1.42bn
TOUCH:2,168-2,180p12-MONTH HIGH:2,998pLOW: 2,090p
DIVIDEND YIELD:1.2%PE RATIO:NA
NET ASSET VALUE:748p*NET DEBT:17%
Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201723914.369.08.10
2018239-6.8-11.78.90
% change---+10
Ex-div:07 Mar   
Payment:04 Apr   
*Includes intangible assets of £186m or 286p a share