Genus warns on lower profits as pigs weigh on China

15th May 2014 09:14

Challenging conditions in the pig market continued to weigh on livestock breeding group Genus, with profits 'slightly lower' in the first ten months of the year in constant currency and further hit by currency affects.The FTSE 250 company said it expected the year to end-June to be "broadly" in-line with expectations as although revenues in the first four months of the second half have grown at double-digit rates, lower results in the Asia region, principally in China, offset gains in Genus PIC and Genus ABS.Furthermore, the significant strength of sterling will hit headline results when compared with the previous year.For the period from January 1st to mid-May, overall demand for Genus's products and services grew at higher rates than in the first half of the financial year, when revenues were up 9%.Bovine volumes grew in double digits, as did porcine volumes, supported by the acquisition of Génétiporc in Brazil and strong growth in Asia. But the market conditions in porcine are challenging, as outlined in February's interim statement, with porcine epidemic diarrhoea virus (PEDv) now estimated to have affected over half the North American and Mexican swine herds. In addition, pork prices in China decreased significantly in the period, pushing pig producers in the country into losses."The effects of PEDv and lower pork prices in China are currently expected to continue over the balance of this calendar year," the company said. "Genus expects performance improvements gradually to come through in constant currency in the 2015 financial year, as these headwinds reduce and we continue to execute our strategy."Market conditions for Genus's dairy and beef customers have been favourable, supported by rising output prices for milk and beef. OH