Genus PLC (GNS) has reported its preliminary results for the fiscal year ended June 30, 2024, showcasing resilience and strategic advancements despite challenging trading conditions. CEO Jorgen Kokke highlighted the company's progress in key areas such as the commercialization of its Porcine Reproductive and Respiratory Syndrome (PRRS) Resistant Pig and the growth of its porcine business, particularly in China. The company is expecting FDA approval for its gene-edited pig in 2025.
Financial Performance and Strategic Priorities
Genus reported revenue of GBP669 million and an adjusted operating profit of GBP78.1 million for the fiscal year. While the company saw a decrease in profits in some areas, it managed to maintain a steady dividend and is expecting significant growth in the upcoming fiscal year. The company's strategic priorities include driving growth in porcine, commercializing PRRS Resistant Pig, transforming ABS, and generating returns from R&D investments.
Genus anticipates solid profit growth from PIC and a return to profit growth for ABS in FY 2025. The company is expecting FDA approval for their PRP gene-edited pig in 2025 and has favorable determinations in other jurisdictions. Significant PBT growth is expected in constant currency for the next fiscal year, although recent sterling appreciation may pose a currency headwind.
Porcine Business and PRRS Resistant Pig
PIC, Genus's porcine business, saw a 2% decrease in profit in constant currency, but demonstrated growth in the second half of the year. Genus doubled its royalty customer base in China. The company is advancing through the regulatory process with the U.S. FDA as well as in other key markets for its PRRS Resistant Pig (PRP). In terms of the FDA, they are helping to define a novel post-approval oversight for their PRP gene edit and preparing for the FDA's visits to their farms. As PRP is the first mainstream gene-edited protein, there is a rigorous, but also somewhat unpredictable process to go through. They are very pleased with the collaboration with the FDA and are expecting approval in calendar year 2025. They also have made submissions to the authorities in Canada and Japan, and their initial dialogue with those authorities has been constructive. In China, a specially designed research facility has been built by their Chinese partner, BCA. The gene-edited animals will be arriving in China next week where they will be used for further local testing.
Bovine Business and Value Acceleration Program
ABS, Genus's bovine business, reported a 3% decrease in adjusted operating profit in constant currency, with an improvement in the second half due to the Value Acceleration Program (VAP). The VAP is expected to deliver GBP20 million of annualized operating profit improvement over two years.
Challenges and Opportunities
PIC China's profits decreased by GBP5.7 million. ABS saw a 6% volume decline and a decrease in adjusted operating profit by 3% in constant currency. Net debt rose to GBP249 million. However, trading regions outside of China experienced a 5% growth in profit in constant currency. Europe's profit grew by 13%, showcasing strong performance.
InvestingPro Insights
With a market capitalization of $14.58 million and a robust revenue growth of 26.76% in the last twelve months as of Q4 2023, Genus's strategic initiatives are reflected in its financial metrics. Despite a challenging trading environment, the company's gross profit margin stands strong at 50.02%, underscoring its ability to maintain profitability under pressure.
InvestingPro Tips indicate that Genus is expected to see net income growth this year, a testament to its resilience and the potential upside for investors. Additionally, Genus has demonstrated a commitment to shareholder returns, maintaining dividend payments for an impressive 24 consecutive years.
