Low demand for bull semen brings reduced profits for Genus

The FTSE 250 firm said market conditions for its customers were mixed.

“Strong pig production volumes in some markets, such as the US, resulted in significantly reduced pig prices for producers there, but pig prices improved in Europe and remained strong in China, which supported continuing good demand for [our] PIC genetics and growth in volumes in the period,” its board said in a statement.

“Dairy prices globally started to improve, but are still at levels where many dairy farmers are not profitable.”

Genus said beef prices fell in the US throughout the year, resulting in a more cautious approach from customers.

“These market conditions, combined with increased price competition particularly in North and Latin America, resulted in lower semen volumes for Genus ABS, while IVB continued to grow embryo volumes.”

Revenues for the four months to 31 October 2016 increased modestly in constant currency compared with the prior year, with increased porcine stockings and royalties largely offset by lower bovine semen sales, it reported.

“As expected, adjusted profit before tax was lower in constant currency as planned increases in research and development expenditure were made, while exchange rates provided a benefit during the period.”

The board confirmed Saskia Korink, chief operating officer of Genus ABS Dairy, has left the company and Karim Bitar is leading the ABS Dairy business while a search for Korink’s successor, which is underway, is concluded.

Genus said it continues to await judgement from the Federal Court in Wisconsin on its request for an injunction to enable it to terminate its Sexing Technologies semen sorting contract without penalty or damages.

“This would enable the early introduction of competition into the market for processing sexed bovine semen through the launch of our Genus Sexed Semen technology.

“Genus made progress towards its strategic objectives during the period under review and expects to perform in line with overall expectations for the financial year 2017.”