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Genus reports strong first half, despite challenging market conditions

Approval for PRRSv-resistant pig program is expected in the first half of 2024

September 7, 2023

3 Min Read
National Pork Board

Genus has announced its preliminary results for the first half of 2023, citing strong group performance, with group revenue rising by 10% in constant currency (16% in actual currency). The full report has been made available on the investors section of the Genus plc website.

“The group achieved a strong operational performance despite ongoing challenging market conditions for producers in several important markets. Revenues grew in all regions and both PIC and ABS delivered profit growth," said CEO Jorgen Kokke. "This also enabled us to deliver record adjusted EBITDA and good cashflow for the group. Growth in R&D investments, primarily due to the strategically important gene editing work and expansion of PIC’s elite farms, as well as higher interest costs, resulted in adjusted profit before tax consistent with the prior year."

Other notable group performance results include:

  • Adjusted operating profit including joint ventures up 3% in constant currency (10% in actual currency)

  • R&D investment increased by 19% as planned, including a 66% rise in gene editing expense in preparation for the anticipated commercialization of pigs resistant to porcine reproductive and respiratory syndrome virus

  • Adjusted profit before tax flat in actual currency (8% lower in constant currency), with net finance costs up 124%2

“PIC’s performance was particularly impressive, achieving a record adjusted operating profit for the year. While PIC China had a more challenging second half, this was offset by the strong performance in the rest of the world. Our focus is on ensuring that PIC China can offer the best genetics and customer service in the market, underpinned by royalty contracts where we share in our customers’ success and build a predictable business. Population of PIC’s new world-class elite farms in Canada, Brazil and China positions the business very well to capture future growth opportunities, including commercializing PRRSv-resistant edited pigs," said Kokke.

“The PRRSv-resistant pig program is reaching an exciting stage, having completed our submissions to the FDA ahead of schedule. Approval is expected in the first half of 2024. We are also progressing the approvals for other markets, including China where we now have consent to import PRRSv-resistant pigs for in-country assessment."

Outlook
The global animal genetics company says it achieved a strong adjusted operating profit performance in fiscal year 2023, despite challenging conditions for our customers in several parts of the world. Over a five-year period they delivered performance in line with their stated medium term objective of a 10% CAGR in adjusted operating profit excluding gene editing, in constant currency. The firm remains confident that Genus is well placed to continue gaining market share through their world class team, market leading genetics, global supply chain and pioneering technology.

Genus also anticipates that the China porcine market will continue to be volatile, reflecting continued disease outbreaks, a less consolidated industry structure and weak consumer demand. The company remains confident PIC China will be a resilient growth business over the medium-term through offering the best genetics, customer service and increasing the penetration of our royalty-based model.

In fiscal year 2024 they expect to continue to perform in line with expectations for adjusted operating profit excluding gene editing, in constant currency. However, the recent strengthening of the pound sterling relative to several of our key trading currencies is currently anticipated to lead to a currency translation headwind of approximately £5-6m in the year. In addition, the company expects finance costs to increase by approximately £2m as a result of the higher interest rate environment. The board therefore expects modest growth in adjusted profit before tax in actual currency for fiscal year 2024.

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