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magazineGenus beats earnings forecasts again
Genus (GNS) £37.40
Gain to Date: 31.4%
Original entry point: Buy at £28.46, 19 September 2019
Despite the challenges of Covid-19 that affected supply chains in January and tough second-half comparisons, leading animal genetics company Genus (GNS) handsomely beat analyst forecasts again when it reported full-year results on 8 September, proving how resilient the business has become in recent years.
Revenues grew 13% to 515.4 million while operating profits jumped 22% higher to £71 million demonstrating operational leverage. The company has doubled porcine capacity to meet Chinese demand following the reduction in pig herds from African swine fever, suggesting more operational benefits in future.
The company hopes to deliver double digit growth in adjusted operating profits over the medium-term as it continues to take market share, driven by increasing its lead in porcine and bovine genetics.
Research and development is the key to maintaining the lead in genetics so it is positive to see Genus increase R&D spend by 19% to around £65 million, close to 12% of sales.
Genus appears to have found new gears and is in an enviable position where past investments are paying off, as illustrated by the 47% volume growth in its sexed products. New products such as NuEra, a beef genetics product which has proved it worth in trials, are close to contributing to future growth.
SHARES SAYS: Keep buying
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