September 9, 2020

 

Livestock genetics company Genus profits from China's swine farmers demand

 

UK-based Genus, a livestock genetics company reported higher than projected annual earnings thanks to increased demand from swine farmers in China looking to rebuild swine herds, Reuters reported.

 

Shares for the company rose to record highs after the company reported 17% higher earnings per share for the year ended June. Genus' shares closed at 85.4 pence (~US$1.12) higher than the projected 76.2 to 79 pence (~US$1 to US$1.03) projected by analysts at Liberum Capital, Jefferies and Investec.

 

The company's operating profit is 12% up at GBP 81.2 million (~US$106.38 million; GBP 1 = US$1.30), which include joint ventures but excludes gene editing.

 

Revenue rose 13% to hit GBP 551.4 million (~US$714.3 million), with a 17% increase in revenue from the company's swine genetics sector thanks to demand from China.

 

Genus' supply chain in China doubled over the year as it permitted approved customers to 'multiply' its genetics. The company produces breeding livestock through genetic improvement, and previously only had 2% of China's market.

 

China is pushing to recover its swine herds, which shrank following African swine fever outbreaks in the country since 2018.

 

Stephen Wilson, CEO of Genus, said China's rebuilding efforts are led by professional swine companies looking to purchase high-quality genetics.

 

Wilson said 40% of China's swine market is dominated by the top 50 producers, compared to only 10% two years ago.

 

Genus' CEO said the company's next objective is to have 100,000 great-grandparent and grandparent breeding stock next fiscal year.

 

The company's revenues are drawn from sales of breeding stock and royalties.

 

Wilson said sows previously sent for slaughter have been kept for breeding due to low female swine numbers. But productivity from these sows is only two thirds compared to a sow that has been bred to breed. Because of this, he expects demand to increase as swine prices steadily drop with China's swine herds recovering.

 

Genus shares are currently at 3,780 pence (US$49.38), a record. It's currently trading at 3,716 pence (US$48.54), up 4.441%.

 

-      Reuters