Genus plc Reports Interim First Half 2021 Fiscal Year Results

Genus plc (LSE: GNS), a global biotechnology leader in animal genetics, today reported interim results for the six-months period ending December 31, 2020, as well as provided a business update on recent corporate developments in its worldwide porcine and bovine genetics businesses. The full report has been made available on the Investors section of the Genus plc website. The Company will discuss its corporate, operational and financial highlights on a pre-recorded webcast, scheduled today, Thursday, February 25, 2021 at 7:01 AM GMT, 2:01 AM EST. A recording of the webcast will be available here and on the Company’s website.

“Genus performed very strongly and made further good strategic progress in the first half of the 2021 fiscal year,” remarked Stephen Wilson, Chief Executive of Genus plc. “The Group continued to show its resilience during the COVID-19 pandemic and I would like to thank our people who have shown great dedication to our customers whilst navigating the various challenges that the pandemic has caused.”

“Both PIC and ABS grew adjusted operating profits in double digits, with China, Brazil, India and Russia, being notably high growth markets. PIC’s expansion in China was significant, gaining share with large producers that have been re-stocking following the spread of African Swine Fever in 2019. PIC Europe’s growth was also very strong, reflecting success with key accounts and leveraging our genetics and supply chain.

“ABS’s volume growth in the half was a record, driven by the continued success of Sexcel®, and strong performance by our proprietary NuEra® beef business. Latin America, Europe and Asia all grew strongly, and ABS’s adjusted operating margin improved through better product mix and operating leverage.

Mr. Wilson concluded, “In the second half of the 2021 fiscal year we expect that growth will be lower and there are increased currency headwinds. Nevertheless, Genus continues to have significant growth opportunities and the Board’s expectations remain unchanged for the full year.”

Outlook

Genus performed very strongly in the first half of the year, and we expect that the Group will remain resilient as the COVID-19 pandemic continues to impact society and the world economy and presents challenges for elements of the animal protein value chain. Although growth in the second half is anticipated to be lower than experienced in the first half and there are increased currency headwinds, the Board expects the company to perform in line with its expectations for the financial year 2021.

Results presentation today

A pre-recorded webcast briefing to discuss the interim results for the six months ended 31 December 2020 will be held via a video webcast facility and will be accessible via the following link from 7:01am GMT today: https://webcasting.buchanan.uk.com/broadcast/600ed56bea090471deaf6780

An archived recording of the webcast will also be available on the Investors section of the Company’s website.

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Corporate Highlights:

 

Adjusted results1

 

Statutory results

 

Actual currency

 

Constant

currency

change2

 

Actual currency

Six months ended 31 December

2020

2019

Change

 

 

2020

2019

Change

 

£m

£m

%

 

%

 

£m

£m

%

Revenue

285.7

270.7

6

 

11

 

285.7

270.7

6

Operating profit exc. JVs

45.1

34.4

31

 

37

 

35.5

28.1

26

Operating profit inc. JVs exc. gene editing

54.7

43.7

25

 

35

 

 

 

 

Profit before tax

48.4

36.6

32

 

44

 

38.7

30.4

27

Free cash flow

26.6

10.5

153

 

n/m3

 

 

 

 

Basic earnings per share (pence)

57.3

43.5

32

 

44

 

48.4

36.5

33

Dividend per share (pence)

 

 

 

 

 

 

10.3

9.4

10

Strong revenue growth of 6% in actual currency and 11% in constant currency2

  • Strong revenue growth of 8%2 in PIC, our porcine genetics business; royalty revenue up 7%2, particularly high growth in Asia and Europe
  • Continued royalty growth and high breeding stock sales in China contributing to PIC volume growth 11% (up 7% excluding China)
  • Excellent revenue growth of 17%2 in ABS, our bovine genetics business, particularly Brazil, Russia, India and China; continued success with Sexcel® and NuEra® beef genetics
  • ABS volume growth of 19%, with sexed volumes up 42% and beef up 22%

Record adjusted profit before tax (‘PBT’)1, up 44% in constant currency; statutory PBT at £38.7m

  • Adjusted operating profit including joint ventures and excluding gene editing cost1 up 35%2
  • Double digit adjusted operating profit growth1 in PIC (up 17%2) and ABS (up 37%2); R&D investment decreased 2%2 with lower spend than planned due to COVID-19 short-term constraints
  • Statutory PBT increased 27% to £38.7m, impacted by a lower net IAS 41 biological asset valuation uplift offset by lower exceptional costs

Strong cash generation, earnings momentum and increased dividends

  • Record first half free cash inflow1 of £26.6m, net debt1 reduced to £92.2m, net debt to EBITDA1 of 0.8x
  • Adjusted earnings per share1 up 44%2; interim dividend up 10% with 3.3x adjusted earnings cover4

Good strategic progress

  • Continue to win new customers globally, with leading porcine and bovine genetics; contributing through genetic improvements to the reduction in use of energy, water and land in animal protein production
  • Beijing Capital Agribusiness Co. Ltd (‘BCA’) long-term collaboration in relation to PRRSv is progressing well, and first non-gene edited pigs shipped from US to stock BCA multiplication farms
  • Continued shift in ABS’s product mix with more than 20% of global sales volume now Sexcel®
  • Significant capex spend is planned to support expansion of best in industry farm facilities for PIC and ABS
  • Sustainability a key focus through our ‘Delta C’ programme; climate targets set to reduce carbon emissions and become carbon neutral

Financial Review

While there were some impacts from COVID-19 in the Group, the overall performance in the first half of the year was very strong, with revenue increasing by 6% (11% in constant currency), and adjusted profit before tax growing 32% (44% in constant currency), to a record £48.4m.

Revenue of £285.7m (2019: £270.7m) increased 6% in actual and 11% in constant currency during the period. PIC (8% growth) and ABS (17% growth) both contributed, with particularly strong trading across Brazil, Russia, India and China. Strategically important porcine royalty revenue was up 7% in constant currency and ABS’s volume growth was a record high of 19% achieved through sexed genetics up 42%, and beef up 22%.

Adjusted profit before tax was up 32% (44% in constant currency), the highest growth rate in over 10 years. This reflected double digit growth in adjusted operating profit in both PIC and ABS. The ongoing impact of African Swine Fever (‘ASF’) in China led to very high pork prices continuing through the period, driving strong breeding stock sales, royalty income and farm margins for PIC.

As a result of Genus’s strong earnings growth and cash flow generation, the Board has declared an interim dividend of 10.3 pence per share, an increase of 10% on last year’s interim dividend, which is payable on 1 April 2021 to shareholders on the register at 5 March 2021.

About Genus

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.

Forward-looking Statements

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

____________________________

1 Adjusted results are the Alternative Performance Measures (‘APMs’) used by the Board to monitor underlying performance at a Group and operating segment level, which are applied consistently throughout. These APMs should be considered in addition to, and not as a substitute for or as superior to statutory measures.

2 All growth/decline rates quoted are in constant currency unless otherwise stated. Constant currency percentage movements are calculated by restating the results for the six months ended 31 December 2020 at the average exchange rates applied to adjusted operating profit for the year ended 30 June 2020.

3 n/m = not meaningful

4 Calculated on a rolling 12-month basis

 

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