Genus, the UK international animal breeding business, has reported a 2% fall in operating profit on 5% lower revenues for the first half of its current financial year. This is in line with difficult dairy and pig markets in Europe and North America, but its Asian activities have seen some recovery.
The group has made an operating profit of £26.3 million on sales of £188.3m in the six months to December 31st 2015, compared to £27m and £198.5m in H1 of the previous year.
Of the three divisions, the Genus PIC pig business saw adjusted operating profit increase 9% to £32.2m on revenues 2% lower at £84.4m. European activities were affected by increased pig production and the Russian export ban, which led to a 9% fall in farmgate prices with most producers struggling to make a margin. In North America, pig prices were 30% down as rising production reached processing capacity limits.
The dairy segment Genus ABS had a 28% fall in operating profit to £8.6m on revenues 6% down to £77.6m. Milk prices were depressed across all the company’s global markets, with rising production and weak demand. Europe saw a 3% increase in milk output in the first six months after the end of EU quotas, with sales constrained by the Russian export ban and weak demand for imports in China.
Genus Asia’s operating profit rose by 87% to £5.8m on sales that were 6% higher at £22.2m. Pig prices in China were up by 20% year-on-year following nearly two years of sow number cutbacks involving up to a fifth of the national herd, in line with a national policy towards larger scale production units.
“Our performance was in line with our expectations and demonstrated the success of our strategy and strength of our diverse species and geographic presence,” notes Genus chief executive Karim Bitar. “Performance was particularly strong in Asia, led by China, whilst ABS was impacted by challenging trading conditions, particularly in Europe.
"The announcement of the first pigs resistant to the devastating PRRS virus, developed through gene editing with the University of Missouri, was a very significant milestone in the history of our industry and an early fruit of our R&D commitment.
"We expect to make further good progress during the second half of the year and we anticipate that our full year performance will be in line with our objectives.”