Good Strategic Progress and Investing for
Growth
Webcast Available Today at 7:01 AM GMT, 2.01
EST
Genus (LSE:GNS), a leading global animal genetics company, today
announces its interim results for the six months ended 31 December
2021. The full report has been made available on the investors
section of the Genus plc website. The Company will discuss its
corporate, operational and financial highlights in a pre-recorded
webcast at 7:01 AM GMT, 2.01 EST.
Commenting on the interim results, Stephen Wilson, Chief
Executive, said:
“As expected, the Group performed strongly other than in the
porcine business in China and continued to make good strategic
progress while investing for the future. Our strategic
collaboration with Olymel announced today will further strengthen
PIC’s North America business.
“Building on record volume growth in the first half of last
year, ABS continued to grow volumes and expand margins, driven by
the success of Sexcel, strong growth across all regions of our
proprietary NuEra beef genetics and continued operating
leverage.
“PIC’s adjusted operating profits (excluding PIC China) achieved
strong growth, underpinned by market share gains in key customers
in North America and Latin America. However, as previously
announced in November 2021, the current porcine market in China has
had an adverse impact on our trading in China during the first half
of the 2022 fiscal year. Since November, the live pig price in
China has remained below the cost of production and declined
further to below 13RMB/kg since the beginning of January. The
significant impact of PIC China’s trading has consequently
decreased PIC’s and the Group’s adjusted operating profit.
“China live pig prices need to improve and be sustained for
producer confidence to return and lead to improved demand for
porcine genetics. Industry expectations are that prices will
improve later in the year, however there is uncertainty on the
timing and extent of a recovery. Consequently, we expect the China
porcine market will continue to impact on the Group’s performance
in the second half of the 2022 fiscal year. Importantly, following
the investments in our porcine elite supply chain, Genus is well
placed to support Chinese producers needs when market conditions
improve, and we remain confident in the future growth prospects of
PIC China.
“The Board remains confident in the Group's strategy, the many
opportunities for Genus and medium-term growth expectations remain
unchanged.”
Results presentation today
A pre-recorded analysts and bankers briefing to discuss the
interim results for the six months ended 31 December 2021 will be
held via a video webcast facility and will be accessible via the
following link from 7:01am GMT today:
https://webcasting.buchanan.uk.com/broadcast/61f900ee12956e448c9972f7
An archived recording of the webcast will also be available on
the Investors section of the Company’s website.
Corporate Highlights
Adjusted results[1]
Statutory results
Actual currency
Constant currency
change2
Actual currency
Six months ended 31 December
2021
20203
Change
2021
20203
Change
£m
£m
%
%
£m
£m
%
Revenue
281.2
285.7
(2)
1
281.2
285.7
(2)
Operating profit exc JVs
35.0
43.8
(20)
(18)
23.9
34.2
(30)
Operating profit inc JVs exc gene
editing
43.3
53.4
(19)
(17)
Profit before tax
37.0
47.1
(21)
(19)
24.4
37.4
(35)
Free cash flow
(16.1)
26.6
n/m4
n/m4
Basic earnings per share (pence)
42.4
55.3
(23)
(21)
30.4
46.4
(34)
Dividend per share (pence)
10.3
10.3
-
Group performance impacted by PIC China; strong progress in
the rest of the business
- Total Group revenue up 1% in constant currency (2% lower in
actual currency), adjusted profit before tax (‘PBT’)1 down 19% in
constant currency (21% in actual currency)
- Excluding PIC China; Group adjusted PBT up 28% in constant
currency (25% in actual currency), and revenue up 7% in constant
currency (4% in actual currency)
- R&D investment increased 10%2 as planned
- Statutory PBT decreased by 35% to £24.4m, due to the lower
adjusted profit and net IAS 41 biological asset valuation
decrease
Challenging market conditions for PIC in China as expected,
strong PIC performance elsewhere
- China pig prices currently under 13RMB/kg, down from 35RMB/kg
in December 2020
- PIC volumes 2% lower, revenue 4%2 lower. Royalty revenue 1%2
lower excluding a customer refund in China5. Consequently, PIC’s
Adjusted operating profit declined 15%2
- Strong market share gains in North America and Latin America;
PIC’s volumes up 7% excluding China
- Excluding China, PIC’s revenue up 8%2, royalty revenue up 4%2,
adjusted operating profit up 13%2
Good revenue growth of 4%2 and volume growth of 4% in ABS,
building on a very strong prior year
- Continued Sexcel® success with sexed volumes up 24% and NuEra®
beef with volumes up 13%
- Continued shift in ABS’s product mix with 24% of global volumes
sexed genetics and 32% beef
- Strong growth in Brazil, India and China
- ABS’s adjusted operating profit up 21%2
Lower cash generation and earnings than prior year, dividends
maintained
- Free cash outflow1 of £16.1m, reflecting expected higher
working capital outflows and planned capital investment
- Net debt1 increased to £143.3m, net debt to EBITDA1 ratio of
1.4x, within 1.0x-2.0x targeted range
- Adjusted earnings per share1 down 21%2
- Recommended interim dividend maintained at 10.3p with 2.8x
adjusted earnings cover6
Good strategic progress
- With our leading porcine and bovine genetics, Genus continued
to win customers globally
- Accelerating genetic improvement and supply availability in our
porcine elite farms. Investments include a new elite genetics farm,
Ankang, in China and Atlas, in Canada, where the first animals have
arrived
- New third party IntelliGen technology customer wins, including
a significant government tender win in India
- Investments in our new industry leading bull facilities
delivering strong efficiency gains
- PRRSv resistant pigs programme is progressing to plan with
hundreds of third generation gene-edited animals today
- On 22 February 2022 PIC entered a strategic collaboration with
Olymel, the largest porcine producer in Canada, to acquire their
elite porcine genetics for CAD$25m (£14.5m), and for the long-term
provision of products and services through their AlphaGene genetics
programme
Outlook
As expected, the Group performed strongly other than in the
porcine business in China and continues to make good strategic
progress while investing for the future. The board is monitoring
closely the potential risks to Genus and its employees of the
geopolitical situation in Russia and the Ukraine. We are taking
risk management actions where appropriate.
As referenced in the November 2021 AGM Trading Update, the
current porcine market in China has had an adverse impact on our
trading in China during the first half of the 2022 fiscal year.
Since November, the live pig price in China has remained below the
cost of production and declined further to below 13RMB/kg since the
beginning of January. The impact of PIC China’s trading has
consequently decreased PIC’s and the Group’s adjusted operating
profit, despite robust performance from the rest of the Group.
China live pig prices need to improve and be sustained for
producer confidence to return and lead to improved demand for
porcine genetics. Industry expectations are that prices will
improve later in the year, however there is uncertainty as to the
timing and extent of recovery. Consequently, we expect the China
porcine market will continue to impact on the Group’s performance
in the second half of the 2022 fiscal year. Importantly, following
the investments in our porcine elite supply chain, Genus is well
placed to support Chinese producers needs when market conditions
improve, and we are confident in the future growth prospects of PIC
China.
The Board remains confident in the Group's strategy, the many
opportunities for Genus and medium-term growth expectations remain
unchanged.
About Genus
Genus advances animal breeding and genetic improvement by
applying biotechnology and sells added value products for livestock
farming and food producers. Its technology is applicable across
livestock species and is currently commercialised by Genus in the
dairy, beef and pork food production sectors.
Genus's worldwide sales are made in over 80 countries under the
trademarks 'ABS' (dairy and beef cattle) and 'PIC' (pigs) and
comprise semen, embryos and breeding animals with superior genetics
to those animals currently in farms. Genus's customers' animals
produce offspring with greater production efficiency and quality,
and our customers use them to supply the global dairy and meat
supply chains.
Genus’s competitive edge comes from the ownership and control of
proprietary lines of breeding animals, the biotechnology used to
improve them and its global supply chain, technical service and
sales and distribution network.
Headquartered in Basingstoke, United Kingdom, Genus companies
operate in over 24 countries on six continents, with research
laboratories located in Madison, Wisconsin, USA.
Forward-looking Statements
This Announcement may contain, and the Company may make verbal
statements containing “forward-looking statements” with respect to
certain of the Company’s plans and its current goals and
expectations relating to its future financial condition,
performance, strategic initiatives, objectives and results. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Announcement.
Forward-looking statements sometimes use words such as “aim”,
“anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”,
“goal”, “believe”, “seek”, “may”, “could”, “outlook”, “will” or
other words of similar meaning. By their nature, all
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances which are beyond the
control of the Company, including amongst other things, diverse
factors such as domestic and global economic business conditions,
market-related risks such as fluctuations in commodity prices,
interest rates and exchange rates, the policies and actions of
governmental and regulatory authorities, the effect of competition,
inflation, deflation, the timing effect and other uncertainties of
future acquisitions or combinations within relevant industries, the
rate of on-going porcine re-stocking in China after African Swine
Fever, the continued development and improvement of our IntelliGen®
technology, the development and registration of our innovative new
products, such as our gene edited porcine reproductive and
respiratory syndrome virus resistant pigs, the continued growth in
emerging markets, the effect of tax and other legislation and other
regulations in the jurisdictions in which the Company and its
respective affiliates operate, the effect of volatility in the
equity, capital and credit markets on the Company’s profitability
and ability to access capital and credit, a decline in the
Company’s credit ratings; the effect of operational risks; and the
loss of key personnel. As a result, the actual future financial
condition, performance and results of the Company may differ
materially from the plans, goals and expectations set forth in any
forward-looking statements. Except as required by applicable law or
regulation, the Company expressly disclaims any obligation or
undertaking to publish any updates or revisions to any
forward-looking statements contained in this Announcement to
reflect any changes in the Company’s expectations with regard
thereto or any changes in events, conditions or circumstances on
which any such statement is based.
No statement in this Announcement is intended to be a profit
forecast, and no statement in this Announcement should be
interpreted to mean that earnings per share of the Company for the
current or future financial years would necessarily match or exceed
the historical published earnings per share of the Company.
Information contained in this Announcement should not be relied
upon as a guide to the Company’s future performance.
This announcement is available on the Genus website
www.genusplc.com.
1 Adjusted results are the Alternative Performance Measures
(‘APMs’) used by the Board to monitor underlying performance at a
Group and operating segment level, which are applied consistently
throughout. These APMs should be considered in addition to, and not
as a substitute for or as superior to statutory measures. 2 All
growth/decline rates quoted are in constant currency unless
otherwise stated. Constant currency percentage movements are
calculated by restating the results for the six months ended 31
December 2021 at the average exchange rates applied to adjusted
operating profit for the year ended 30 June 2021. 3 Results
restated following an April 2021 IFRIC Interpretation Committee
agenda decision that resulted in previously capitalised software
assets being expensed lowering profit by £1.3m in FY21 H1. 4 n/m =
not meaningful 5 Commercial terms with a customer changed in the
period to align with long term interests resulting in a one-time
£3.7m refund related to historic royalties. 6 Calculated on a
rolling 12-month basis.
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version on businesswire.com: https://www.businesswire.com/news/home/20220223006263/en/
Genus plc Stephen Wilson, Chief Executive Officer Alison
Henriksen, Chief Financial Officer Tel: +44 1256 345970
Investor Relations and Media Contacts:
United Kingdom Buchanan Charles Ryland / Chris
Lane / Sophie Wills Tel: +44 207 466 5000
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