Genus reports 4% dip in half year pre-tax profit

Animal genetics company Genus on Tuesday reported a 4% drop in half year adjusted pre-tax profit to £23.8m as revenues declined.

Underlying revenue in the six months ended 31 December 2015 fell 5% to £188.3m, reflecting less porcine by-product sales following the exit of its Génétiporc Quebec nucleus business the previous year and lower pig prices in North America.

Adjusted basic earnings per share edged down 3% to 28.8p while operating profit dipped 2% to £23.9m.

Net cash flow from operating activities fell to £5.6m from £19.6m in the same period in 2014, due to seasonal working capital outflows, higher exceptional items and increased tax payments. The previous period also had a boost from the sale of Génétiporc Quebec.

Net debt rose to £88.2m from £73.2m as a result of further investments and a £5.7m adverse impact of exchange movements. The group’s borrowings are primarily in US dollars.

Genus PIC, the group’s porcine genetics unit, achieved a 10% increase in profits in constant currency with growth across all regions.

However, the bovine business Genus ABS saw profits slide 23% in constant currency as tough dairy market conditions, particularly in Europe, sent volumes lower. Genus said it took measures to cut costs in Europe and increase prices in Latin America, where exchange rate devaluations have had the highest impact.

Genus increased its interim dividend by 10% to 6.7p per share.

"Our confidence in the strategy for the business and in the future prospects for the Company is reflected in the 10% increase in our interim dividend,” said chief executive Karim Bitar.

“We expect to make further good progress during the second half of the year and we anticipate that our full year performance will be in line with our objectives."

Shares fell 1.35% to 1,460p at 0940 GMT.