US drought may slow demand for Genus's services

published 4 September 2012

Record results from Genus, the animal genetics company, topped full-year sales and profits expectations but this year may prove tougher as farmers deal with the effects of the US drought.

Revenue in the year to June 30th rose 10%, or 12% in constant currency (CC) terms, to £341.8m from £309.9m the year before. The market had been expecting revenue of around £333.2m.

Headline profit before tax rose 19% (22% in CC terms) to £46.5m from £39.0m the previous year, while statutory profit before tax rose 33% to £54.4m from £40.8m a year earlier. Investment analysts following the stock had pencilled in a figure of £44.6m for adjusted profit before tax.

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Growth in volumes was the primary driver for the bull and pig semen provider. Porcine volumes were up 7% and bovine volumes up 8%. Growth was particularly strong in Asia, Latin America and the porcine business in North America, the company said.

The full-year dividend has been increased by 10% to 14.6p from 13.3p the previous year, in line with market expectations.

The group conceded that market conditions remained generally favourable for Genus and its customers in the year just ended, but noted they became more challenging towards the end of the reporting period, largely because of increased feed costs in North America caused by drought conditions and by weakening global commodity dairy prices.

These conditions are likely to have an impact on a number of Genus's customers in the year ahead, which may lead to some slowing in demand.