February 27, 2008

Genus reports 28-percent rise in first half profits

UK-based animal genetics company, Genus Plc, reported first half pre-exceptional pretax earnings up 28 percent to GBP13.9 million (US$28 million) against GBP10.9 million (US$22 million) in the previous period.

Genus said cost cutting has reduced the impact of feed prices caused in a large part by US policy over biofuels.

Sales were up 4 percent to US$120.4 million (US$239 million) compared with GBP116.1 million (US$231 million) last time, and first half adjusted pre-exceptional EPS was up 21 percent to 16.5 pence/share compared with 13.6 pence last year.

The company said increased diversity and improved efficiency has offset the impact of exceptionally high global animal feed prices.

Richard Wood, chief executive, said the company was in a strong position to meet its full-year targets.

Wood told Thomson Financial News that the company has driven through profit despite currency effects and high feed prices, which he blamed in part on US government subsidies for biofuels driving up the price for feed.

He added that even if farmers put all of their crop to biofuels, there would only be enough fuel for 15 percent of the American vehicles on the road.

Food prices are beginning to rise and farmers are investing in capacity and genetics to improve feed conversion, and that Genus would benefit from this gradual market change, Wood explained.

Furthermore, the company said it cut its net debt to GBP93 million (US$185) from GBP111 million (US$221 million) during the period through fundraising and cutting costs.