Genus plc - Interim results for the six months ended 31 December 2023.

Commenting on the performance and outlook, Jorgen Kokke, Chief Executive, said: 'Genus faced challenging markets which impacted performance in the first half of the year. We have taken rapid action including initiating a comprehensive programme to accelerate the value delivery from our bovine operations. 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.

In North America, Europe and Latin America PIC continued to achieve growth in royalty revenues and operating profit, illustrating the strength of PIC's business model. China continues to be a challenging porcine market, however enhanced commercial focus is delivering results. New royalty customers were signed in the first half which gives us more confidence that our sales approach is effective. The opportunity in China remains significant and given the success of the relationship with our local partner, BCA, we are jointly exploring ways to accelerate our collaboration going forward.

ABS saw weakness across most markets. China dairy was particularly challenging; not only did conventional volumes suffer from a double-digit decline in the dairy herd, but mix was also impacted as demand for sexed genetics reduced.

As described in our recent trading update, taking into account management actions taken, and assuming that present market conditions persist for the balance of the fiscal year, management expects fiscal year 2024 adjusted profit before tax to be not less than GBP58m in actual currency. 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.'

Resilient revenue delivery amidst challenging markets

Low growth and prices in protein production across several markets, China the most impactful

Decisive management actions taken: Value Acceleration Programme underway in ABS to improve profitability and returns from investments

R&D strategic review completed to sharpen alignment to strategic and commercial goals

Commercialisation of the PRP (PRRS Resistant Pig) remains on track; US FDA regulatory progress, genotypic and phenotypic durability submissions accepted. Engagement has shifted to the post-product approval compliance procedures with PRP approval now expected in fiscal year 2025

As expected, first half adjusted profit performance lower year on year

Group revenue increased by +1%2 in constant currency (5% decrease in actual currency)

Adjusted operating profit including joint ventures decreased 17%2 in constant currency (21% decrease in actual currency)

Adjusted profit before tax (PBT) decreased 26%2 (31% decrease in actual currency) as lower profit performances in China of PIC and ABS, and higher net finance costs were partially offset by profit growth in the rest of the Group

Statutory PBT 5% lower at GBP14.3m, with a GBP2.6m increase in the non-cash fair value IAS41 valuation of biological assets of the Group, offset by exceptional expenses of GBP7.5m

Stable free cash outflow1 of GBP3.3m (2022: GBP3.3m outflow) as lower adjusted profit performance, higher exceptional expenses and interest costs were offset by positive working capital management

Cash conversion increased to 69%1 (2022: 62%), in line with expectations

Net debt1 increased to GBP250.1m, as expected, with a net debt to EBITDA ratio of 2.1x1

Adjusted earnings per share 32% lower and interim dividend of 10.3p per share unchanged, with 2.2x1 adjusted earnings cover

Reporting format change

Product Development costs now being allocated to PIC and ABS, having previously been reported within the R&D division; management has determined that this better aligns the costs as well as the opportunities of this activity with the businesses; no change to group adjusted operating profit.

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 85 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.

Contact:

Alison Henriksen

Tel: 01256 345970

Charles Ryland

Tel: 0207 4665000

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