Genus PLC (LSE:GNS) warned pre-tax profit for the financial year 2022 will be below its previous forecast due to volatility in the Chinese porcine market.
The bull and pig semen company said volumes in the four months to end-October at its PIC China business were lower than last year due to a downturn in the Chinese market.
Live pig prices fell from RMB20 per kilo in September to RMB10 in early October and are now around RMB17 per kilo. As a result of the low prices, PIC China's customers have postponed stocking orders and reduced their sow herd numbers significantly, Genus said.
The company expects inventory to be replaced when the market recovers and also believes the current market circumstances will accelerate the consolidation of production, which should increase opportunities for PIC in the medium and long term.
Genus said PIC's royalty revenues showed continued growth in the four months to end-October and the business achieved revenue growth overall.
The bull semen unit ABS saw continued volume and revenue growth, it added.
Looking ahead to the 2023 fiscal year, Genus said it “remains positive as to the medium-term growth prospects of PIC China and is continuing to invest in the local supply chain to be well positioned to capture this growth opportunity”.
Shares plummeted 9.71% to 4,740p in opening trade.