Genus scales back profit outlook on China, Brazil weakness

17th Jul 2024 07:50

(Sharecast News) - Genus saw its share price drop sharply on Wednesday after the animal genetics group said profits this year would be lower than expected due to ongoing market challenges in China and Brazil.

The company, which uses gene-editing and genomic science to improve breeding for lifestock farmers and food producers, said its PIC or pigs division performed in line with expectations over the fourth quarter ended 30 June, though the porcine market in China "continues to be challenging".

Meanwhile, in ABS, which comprises dairy and beef cattle operations, the company experienced lower volumes in the second half compared with last year, as weak demand persisted in several countries, most notably China and Brazil, which impacted profits.

Nevertheless, Genus still guided to a full-year adjusted pre-tax profit of between £58m and £61m, in line with market expectations. "This shortfall in ABS adjusted operating profits was offset by the realisation of early savings as a result of actions taken following the R&D strategic review completed in February 2024," the company said.

Genus said it expects a "significant improvement" in ABS's profit position in the current financial year. However, both ABS volumes and the group's overall adjusted operating profit are estimated to be lower than previously estimated in the year ending June 2025 "due to the continuation of weak demand in several countries, including China and Brazil".

The stock was down 5.8% at 1,794p by 0906 BST.