In a trading update for the period from July 1, 2020, to November 24, 2020, ahead of its AGM on Wednesday morning, the FTSE 250 firm said “good momentum” from trading achieved last year has continued into its 2021 financial year.
For the four months to October 31, Genus said trading was “ahead of expectations” with adjusted pre-tax profits showing strong year-on-year growth amid an expansion in volumes, revenues and operating profits in its porcine and bovine genetics businesses. The group also said its net debt at the end of October was lower than expected and reflected “strong trading and associated cash flow generation as well as normal seasonal trends”.
Meanwhile, Genus said China’s porcine industry has continued to recover from the impact of African Swine Fever (ASF), resulting in “continued good demand” for its porcine genetics products, while the division has also seen strong operating profit growth in all regions other than North America where producers were “continuing to adjust their breeding programs in reaction to the short term surplus of slaughter animals caused by reductions in US pork processing capacity during the first wave of [coronavirus]”.
The company also said that adoption and sales of its bovine genetics sexed and beef-on-dairy products, Sexcel and NuEra, had “continued to grow rapidly” as planned across all geographies. Genus added that research and development investment for the period was lower year-on-year due to some collaboration activity with external research institutions being delayed due to the effects of coronavirus lockdowns, and expected the timing of these activities to remain within the 2021 financial year.
Looking ahead, Genus said they expected that there will “continue to be some challenges” due to the ongoing pandemic and forecast a £4mln foreign currency impact for its current financial year.
Despite this, the company said it expects to “continue to make strategic and financial progress” and is likely to perform ahead of its previous profit growth expectations for the 2021 financial year.
Genus added that its chairman Bob Lawson will retire at the AGM after ten years at the group and will be replaced by Iain Ferguson.
In a note, analysts at Liberum lifted their target price for the company to 4,490p from 4,320p and retained their ‘buy’ rating following what they said was a “confident trading update”.
Shares in Genus rose 5.7% to 4,144p in lunchtime trading.
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