Genus (LON:GNS) reported a strong first-half performance for FY 2026, delivering record first-half profit as growth in its PIC porcine genetics business and ongoing margin work in its ABS bovine genetics unit outweighed a mixed market backdrop. Management also highlighted major strategic milestones, including regulatory progress for its PRRS-resistant pig (PRP) and the formation of a porcine joint venture in China.
Record profit with stable revenue; milestone boosted results
Chief Financial Officer Andy Russell said Genus delivered “strong first half profit on unchanged revenue,” with profit before tax (PBT) up 57% year-over-year to £55.7 million and adjusted earnings per share (EPS) up 53% to 60.8 pence. Those figures included a £5.6 million milestone receipt from Beijing Capital Agribusiness (BCA), tied to regulatory approval for the formation of Genus’s China porcine joint venture.
Group operating profit margin increased to 19.2%, or 17.5% excluding the milestone, Russell said. The company also generated free cash flow of £8.2 million, compared with £10.3 million in the prior-year first half, which management described as a strong result given the prior period’s “record” inflow.
PIC growth led by China royalty expansion
Russell pointed to PIC royalty revenue growth as a key indicator of operational performance. PIC delivered 6% actual-currency royalty revenue growth to £93 million in the half, including “very strong performance in Asia” driven by more than 50% royalty revenue growth in China. He added that every region grew royalty revenue in constant currency.
Including the £5.6 million BCA milestone, PIC adjusted operating profit increased 30% to £72 million, with a margin of 34.5%. Excluding the milestone, PIC operating profit grew 19% and the margin was 33%, Russell said.
Chief Executive Officer Jorgen Kokke attributed China’s performance to a commercial pivot made two years ago toward selling predominantly under a royalty model. In the Q&A session, Kokke said Genus had won “about 25 new customers” in China over the last two years and described current growth as driven by both new customer wins and greater penetration of existing accounts. He said the company’s market share in China remains “below 5, probably in the 4-ish range,” which he characterized as early in the growth opportunity.
On Brazil, Russell said Genus’s joint venture partner Agroceres covers Brazil and Argentina, and that the company saw “good growth across the board” in both upfront breeding stock sales and royalty revenues, supported by a strong underlying market and strong pricing. He noted royalty contract penetration in the region is “slightly lower than North America,” implying a greater mix of upfront sales.
ABS margin improvement driven by Value Acceleration Program
In ABS, Russell said Sexcel (sexed semen) volumes grew 1% while conventional volumes declined 2% in the first half. He cited Value Acceleration Program (VAP) initiatives as the primary driver of profit growth, with ABS profit up 27% and margin improving 180 basis points to 7.1%. Management reiterated a target of a double-digit margin in the medium term.
Russell said ABS realized £4.7 million of VAP benefits in the half, including £2.0 million of annualized Phase II benefits and £2.7 million of in-year Phase III benefit. He added that Genus now expects an in-year Phase III benefit of about £7 million for FY 2026 (ahead of prior expectations of about £6 million), while still expecting total annualized Phase III benefit of about £9 million.
Management also flagged headwinds in Asia after China’s decision to close its borders to U.S. bovine genetics, which Russell said resulted in an “unexpected decrease in Asia profitability.” ABS results were also impacted by a £2.1 million increase in bovine product development costs, which Russell attributed to higher depreciation on prior investments and the effect of acquiring the minority interest in De Novo.
PRP regulatory and market acceptance efforts continue; Canada approval highlighted
Kokke said Genus made further regulatory progress on PRP during the half, including Canadian approval in January, which he described as a major milestone toward North American commercialization. He said Genus still believes approvals in Mexico and Japan are also needed to commercialize in North America and noted continued engagement with regulators in both countries.
In Q&A, Kokke said Mexico’s process is complicated by a less clearly defined approval pathway, but he described strong support from Mexican pork producers and said the country “definitely has a PRRS problem.” He characterized Japan’s process as more similar to the U.S. and Canada but “moving… more deliberately,” while noting Japan has approved other gene-edited products.
Management said PRP-related spending is rising as Genus ramps market acceptance activities. Russell said PRP costs continued to increase as planned, and Genus expects underlying PRP-related expenditure to rise by about £3 million for the full year. Later in the Q&A, executives said PRP spending in the first half was “almost £5 million,” about £1 million higher than the prior year period, with a further step-up expected in the second half.
On market acceptance, Kokke said Genus is engaging broadly with stakeholders and described the PRP work as spanning producer and consumer-facing efforts, with ultimate decision-makers likely to be “the brand owners and the retailers.” He referenced the company’s PRP-focused website and ongoing conference participation.
China joint venture and capital allocation priorities
Management emphasized the strategic importance of the China porcine joint venture with BCA, formed in January. Kokke said the partnership positions Genus for long-term growth in the world’s largest porcine market and noted that “half of the world’s pigs are in China.” Russell said Genus expects to receive approximately £100 million of joint venture formation proceeds from BCA in fiscal Q4.
Kokke described the venture’s governance structure, stating Genus will hold two of five board seats and has the right to appoint the CEO, who will be the former PIC general manager for China. He said the CEO will have broad management rights and that Genus believes interests are aligned with BCA and its shareholder base.
Russell outlined an updated capital allocation approach, emphasizing balance sheet strength first and reiterating a through-the-cycle leverage range of one to two times net debt to EBITDA, while also noting the company may temporarily move below that range after receiving the BCA proceeds. He said priorities then include organic investment (citing PRP as an example), the progressive dividend, selective M&A, and finally potential surplus capital returns.
Genus’s board proposed an interim dividend of 11.2 pence per share, up from 10.3 pence a year earlier. Russell said Genus has simplified its dividend policy and now intends to pay a full-year dividend of 30% to 40% of adjusted EPS, with the interim dividend set at 35% of the prior full-year dividend.
Looking ahead, Kokke said the company is confident it can deliver “significant growth” in FY 2026 adjusted PBT, in line with market expectations that were raised in January, while noting stable overall market conditions despite ongoing disease challenges in some regions and weaker pork prices in China.
About Genus (LON:GNS)
Genus plc operates as an animal genetics company in North America, Latin America, the United Kingdom, rest of Europe, the Middle East, Russia, Africa, and Asia. The company operates through three segments: Genus PIC, Genus ABS, and Genus Research and Development. It sells breeding pigs and semen to breed pigs with various characteristics for pork production under the PIC brand. The company also sells bull semen and embryos to breed calves with various characteristics for milk and beef production under the ABS, Genus, and Bovec brands.
