Genus slips despite bullish outlook and strong first half

Genus, the animal genetics specialist, reported strong profits growth for the first half of its financial year and was bullish about prospects for its recently launched Sexcel product, despite warning of more demanding year-on-year comparisons in the second half.

As well as more demanding year on year comparatives in the second half, chief executive Karim Bitar acknowledged that there were headwinds and said there would be continue investment in its gene editing platform and resistance-development plans.

"We anticipate performing in line with our expectations in the full year on a constant currency basis, but now expect actual currencies to be a headwind for the year," he said, putting the quantum at around £3m for the 2018 financial year.

Revenue in the six months to 31 December of £238.6m trotted 7% higher or 10% in constant currency thanks to 16% underlying sales growth in bull semen and 6% from the pig market.

As well as its own actions, Genus benefited from improved market conditions, helping total volumes grow 8%, with sexed semen up 32% and IVB embryos up 35%.

Operating profit including joint ventures grew 18% to £31.5m and adjusted profit before tax grew 16% to £29.0m. Basic earnings per share grew 34% to 40.9p.

Statutory PBT jumped 25% to £14.3m and EPS 419% to 69p. Statutory numbers includes net accounting movements in valuation of biological assets, which boosted EPS thanks to a £32.0m non-cash reduction in deferred tax liabilities following the US tax reforms, plus amortisation, share-based payment costs and exceptional items.

Sexcel, the FTSE 250 company's proprietary innovative sexed semen offering, has been well received by customers, said Bitar, with early indications of its performance in the field were encouraging. Sales of the Sexcel's IntelliGen technology have begun to third parties in Europe and India, enabling other bull studs to take advantage of the technology.

Bitar said bovine limb ABS continued its improved trend following actions taken last year, while porcine unit PIC continued to perform well, despite market headwinds in China.

The interim dividend was lifted 9.5%, which directors said was a reflection of their confidence in the group's prospects.