Genus (LSE:GNS) shares fell more than 7% on Thursday after the animal genetics company reported higher annual profit and announced a £60 million share buyback, while forecasting moderate operating profit growth for fiscal 2027.
For the year ended June 30, adjusted profit before tax increased 35% to £100.2 million from £74.3 million, while adjusted earnings per share rose 35% to 110.3 pence from 81.8 pence.
Group revenue declined 2% to £658.1 million from £672.8 million, which Genus attributed to the deconsolidation of PIC China following its transfer into a joint venture with Beijing Capital Agribusiness.
Adjusted operating profit increased 17% to £94.8 million, while free cash flow rose 52% to £62.0 million. The company received £98 million of net cash proceeds from the sale of a 51% interest in PIC China into the joint venture, and year-end leverage declined to 0.4 times from 1.5 times.
Genus Announces £60 Million Share Buyback
The board proposed a final dividend of 24.0 pence per share, an increase of 11%. The full-year dividend increased 10%, representing its first increase in five years, with a payout equivalent to 32% of adjusted earnings per share.
Genus also announced a £60 million share buyback programme that it expects to complete during fiscal 2027.
For the new financial year, the company expects moderate operating profit growth at both Genus PIC and Genus ABS.
Adjusted profit before tax is expected to be weighted towards the second half, reflecting disease-related issues affecting North American pork production during the first half, low pork prices in Brazil and subdued global dairy prices.
Stifel Maintains Hold Rating
Stifel analysts said adjusted profit before tax of £100.2 million exceeded their £98 million estimate following the July trading update. Adjusted EPS of 110.3 pence was below the brokerage’s consensus estimate of 110.9 pence.
Stifel said the £60 million buyback provides “fair recognition of progress and the PIC China JV ’windfall,’” but added that “market conditions in FY27 appear more challenging, reflected in the c.3% growth outlook, while the lack of clarity around PRP key market timings is understandable but frustrating.”
Based on Genus trading at approximately 22 times earnings and 12 times EV/EBITDA, Stifel said it sees “a stock broadly up with events” and reiterated its “hold” rating.
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