MARKET REPORT: Pig and cow breeder Genus warns ‘volatility’ in its key Chinese market means it is likely to fall short of growth targets
Genus was one of the FTSE250’s biggest fallers after the pig and cow breeder warned that ‘volatility’ in its key Chinese market meant it was likely to fall short of growth targets.
Pork prices in China, the world’s biggest consumer of pig products, soared last year as the country grappled with an outbreak of African swine fever, a highly infectious disease that is lethal for pigs but does not affect humans. However, as the outbreak has subsided Chinese pig farms have recovered and flooded the market, causing prices to plummet by almost over 50 per cent since the start of this year.
Genus boss Stephen Wilson said uncertainty over prices in the near term will act as a ‘headwind’ into next year, and as a result, growth would be lower into 2022 before bouncing back in 2023.
The assessment overshadowed a strong set of full-year results for the firm, which reported that profits for the year to the end of June had jumped 29 per cent to £84.8m while the final dividend was hiked by 10 per cent to 21.7p per share. The figures were lifted by record growth in the group’s ABS business, which deals primarily with cows, as well as strong revenues from its pork genetics outfit PIC.
Wilson also said the group was making ‘significant progress’ in its research and development programmes, notably the creation of pigs that are genetically engineered to resist Porcine Reproductive Respiratory Syndrome virus (PRRSv), an illness that costs the pig industry millions each year.
However, investors were spooked by the outlook and the shares tumbled 7.6 per cent, or 450p, to 5450p.
Analysts at Liberum were also apprehensive, saying the ‘significant drop’ in the Chinese pork price was ‘clearly making market conditions less attractive for local producers’ and could weigh on demand for Genus products.
The FTSE 100 had a tough day, shedding 1.01 per cent, or 71.32 points, to 7024.21. The FTSE 250 fell 0.21 per cent, or 48.95 points, to 23,799.94.
Computacenter has warned that supply chain problems are likely to persist ‘well into’ next year.
The digital services company, which helps businesses upgrade IT systems and build data centres, is already being hampered by a global shortage of crucial microchips due to the pandemic. This has delayed orders and prompted vendors to hike prices, constraining Computacenter’s revenues and profits. Sales increased by 29 per cent to £3.2billion in the first half of 2021, with profits rising 59 per cent to £115m, the firm said. Shares rose 1.6 per cent, or 48p, to 3030p.
Sportswear retailer JD Sports said it has brought former Nike exec Bert Hoyt aboard as a nonexecutive director. Hoyt previously served as vice-president and general manager of Nike’s Europe, the Middle East and Africa business before retiring in January. There was also talk that JD is considering an investment in online women’s fashion group Misguided, or even a takeover.
Investors, however, were unenthusiastic, with the shares rising just 0.1 per cent, or 1p, to 1033.5p.
Meanwhile, car dealership Lookers said Oliver Laird, finance boss at AIM-listed CPP Group (flat at 466p), will be taking over as its chief financial officer from November 15 while Ian Bull, the ex-finance chief of bookies Ladbrokes, will join the firm as nonexecutive chairman from the start of October. The company also reported a record half-year profit of £50.3m for the six months to the end of June, swinging from a £36.5m loss the same time last year. However, the shares fell 1.5 per cent, or 1p, to 68.1p.
Scottish broadcaster STV Group jumped 4 per cent, or 13.5p, to 351p after snapping up a 25 per cent stake in Brighton-based production company Hello Mary. STV also reported its results for the half-year to the end of June, swinging to an £8.5m profit from a £4.9m loss in the same period last year.