Global livestock genetics business Genus has reported a fall in profitability on higher revenues, as both its pig and cattle product sales rose.
The UK-based business made a pre-tax profit of £40.7 million on sales of £459.1m in the year ended June 30th 2017, compared to £60.9m and £388.3m in the previous year. It says the lower profitability reflects a smaller pension-related exceptional credit this year after a much larger one in the prior twelve months, in addition to a 1.1m downwards revaluation of its biological asset portfolio. On an adjusted basis, it says profitability is up 13% to £56.4m.
The PIC pig division saw 20% revenue growth, with new business in the US and Asian markets and increased sales on a royalty basis. The company says the European pig industry enjoyed a “steady recovery in pig prices and producer profitability after a prolonged period of losses”. The main drivers were a 1.6% decline in the European sow herd and increased exports to China.
In March, PIC acquired the Irish Hermitage porcine genetics business, in a strategic distribution and production partnership, with “encouraging” early results. The company is also investing in a PRRSv disease resistance programme using gene-editing technologies.
Revenues for the Genus ABS bovine division grew by 13%. Actions taken to turnround a first half fall in product volumes saw an 8% increase in H2, averaging 1% over the full year, and better than the 6% reduction in 2016. But full year ABS operating profit dropped 13%, although it was 30% lower at the end of H1.
European milk prices recovered from the 2016 lows, which had led to a 3% contraction in milk supplies across France, Germany, the Netherlands and the UK in the first four months of 2017, compared to 2016. Together with a modest rise in demand, farmgate milk prices have firmed, with a resultant 5% lift in ABS dairy product profitability and 9% for beef genetics.
The year saw a new chief operating officer appointed for Genus ABS Dairy in January 2017; the acquisition of the remaining 49% stake in IVB for £11.4m in March 2017 and continued growth in Mexico and the US by that business. ABS has also launched its Genus Sexed Semen (‘GSS’) technology under the Sexcel brand in the US and India, following the successful conclusion to a lawsuit. It now has the commercial scale to roll it out across its other world markets.
“Genus made substantial strategic progress in 2017 and performed in line with expectations for the year,” says chief executive Karim Bitar. “We have now brought Sexcel, our proprietary innovative sexed semen product, to market and are excited about its prospects to improve the outcomes for our customers. ABS overall had an improved second half year following actions taken. IVB continued to perform well and we are pleased to now own 100% of this important business. PIC continued to perform well and we further strengthened it with the genetic acquisition and distribution and production partnership with Hermitage.
“As planned, we increased our investment in our gene editing platform and made good progress in the development plan. We expect to further increase this investment in 2018. We see solid growth opportunities in the year ahead across our businesses.”