Genus plc Provides Update on Fiscal 2021 Financial Performance
Genus plc (LSE: GNS), a global biotechnology leader in animal genetics, today reported continued strong performance across its operations for the period from July 1, 2020 through November 24, 2020, coinciding with its Annual General Meeting today at 11:00 am GMT.
The positive financial and operational momentum we achieved last year across the Genus Group has continued into our 2021 financial year. In the first four months of fiscal 2021 through October 31, 2020, we achieved further strong growth in volumes, revenues and adjusted operating profits by both PIC and ABS, our porcine and bovine genetics businesses respectively. Encouragingly, royalty revenues in PIC continued to grow in Latin America, Europe and Asia.
In the four months to October 31, 2020, the Group’s financial performance was ahead of expectations, with adjusted profit before tax showing strong growth compared with the same period in the prior year. Net debt at the end of October 2020 was lower than expected and reflected the strong operational and associated cash flow generation as well as normal seasonal trends.
As anticipated, China’s porcine industry continued to recover from the impact of African Swine Fever (‘ASF’), resulting in continued good demand for PIC’s genetics. PIC delivered strong growth in operating profits across all regions other than North America where producers are 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 COVID-19. However, PIC’s market leading product offering has meant it has won new business and continued to gain market share in North America on both the sire lines and dam lines.
The adoption and sales of ABS’ sexed and beef-on-dairy products, Sexcel® and NuEra®, continued to grow rapidly as planned, with strong growth in volumes across multiple geographies. Sales via a digital channel introduced in Latin America during the COVID-19 lockdown period have continued to contribute well in the new financial year. In addition to growth in operating profit, ABS has achieved improvement in its operating profit margin as the mix of revenue from the more profitable Sexcel product increases and greater operational leverage is achieved.
Research and Development investment for the four months was lower than the prior year due to some collaboration activity with external research institutions being delayed as a result of the effects of COVID-19 lockdowns. We currently expect the timing of these activities to remain within the financial year 2021.
The prevalence of COVID-19 across the globe has increased significantly since the announcement of our 2020 preliminary results in September, and we expect there will continue to be some challenges for our customers and our employees as we navigate through these extraordinary circumstances. Currency headwinds continue to be anticipated, and at yesterday’s spot rates, the adverse impact of currencies on the current financial year would be approximately £4 million. However, although it is difficult to predict in these unusual times, based on the first four months’ momentum, we currently anticipate that Genus will continue to make strategic and financial progress and is likely to perform ahead of its previous profit growth expectations for the financial year 2021.
Board of Directors
Bob Lawson will retire as Chairman of Genus at the AGM after ten years’ service, in which time the Group has been transformed into a global biotechnology leader in animal genetics. The Board wishes to record its deep gratitude to him for his immense contribution in this journey. As previously announced, Iain Ferguson will be appointed Chairman at the AGM.
Genus advances animal breeding and genetic improvement by applying biotechnology and sells added value products for livestock farming and food producers. Its technology is applicable across livestock species and is currently commercialised by Genus in the dairy, beef and pork food production sectors.
Genus’s worldwide sales are made in over 80 countries under the trademarks ‘ABS’ (dairy and beef cattle) and ‘PIC’ (pigs) and comprise semen, embryos and breeding animals with superior genetics to those animals currently in farms. Genus's customers' animals produce offspring with greater production efficiency and quality, and our customers use them to supply the global dairy and meat supply chains.
Genus’s competitive edge comes from the ownership and control of proprietary lines of breeding animals, the biotechnology used to improve them and its global supply chain, technical service and sales and distribution network.
Headquartered in Basingstoke, United Kingdom, Genus companies operate in over 25 countries on six continents, with research laboratories located in Madison, Wisconsin, USA.
This Announcement may contain, and the Company may make verbal statements containing “forward-looking statements” with respect to certain of the Company’s plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Announcement. Forward-looking statements sometimes use words such as “aim”, “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “seek”, “may”, “could”, “outlook”, “will” or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, diverse factors such as domestic and global economic business conditions, market-related risks such as fluctuations in commodity prices, interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the rate of on-going porcine re-stocking in China after African Swine Fever, the continued development and improvement of our IntelliGen® technology, the development and registration of our innovative new products, such as our gene edited porcine reproductive and respiratory syndrome virus resistant pigs, the continued growth in emerging markets, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its respective affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company’s profitability and ability to access capital and credit, a decline in the Company’s credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
No statement in this Announcement is intended to be a profit forecast, and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company. Information contained in this Announcement should not be relied upon as a guide to the Company’s future performance.
This announcement is available on the Genus website www.genusplc.com