Genus holds gloomy guidance as tough conditions persist

There were few surprises in Genus's interim results on Thursday after a detailed trading update from the animal genetics company just last week, as it reported a 31% drop in adjusted profits as expected.

Shares in Genus tanked 16% on 15 February after the company guided to full-year adjusted pre-tax profit of £58m, owing to challenging markets, well below the consensus forecast for a similar outcome from last year's £71.5m.

However, an absence of bad news its interim results has provided some reassurance, with shares rising 2.5% at 1,960p following the figures on Thursday morning.

In line with recent guidance, Genus said revenues were £334m in the six months to 31 December, down 5% on the previous year, which it described as "resilient" in a tough environment. At constant currency, revenues would have risen 1%.

Adjusted pre-tax profit was down 26% year-on-year on a reported basis at £29m due to weakness in China, particularly in its porcine business PIC and dairy/cattle unit ABS. In the latter specifically, demand for dairy genetics in China was hit by a double-digit decline in the dairy herd.

As mentioned last week, Genus is now undergoing a so-called "Value Acceleration Programme" in ABS to improve profitability and returns from investments.

"We have taken rapid action including initiating a comprehensive programme to accelerate the value delivery from our bovine operations," said chief executive Jorgen Kokke.

"We have also completed a strategic review of R&D activities. The company is benefitting from savings achieved in the first half and will benefit further in the second half of the year and into FY25, as we optimise resource allocation to best deliver our growth objectives."

The company said there was no change to the full-year guidance given last week, assuming that current market conditions persist for the rest of the year.

"We are seeing the positive impact of our actions to accelerate value delivery which will deliver further benefit in the second half and in subsequent years," Kokke said.