Genus’s results may have come in higher than analysts’ expectations, but they clearly were not enough to get investors on side as shares in the livestock genetics company dropped to a level not seen since 2017. Though total revenues rose 16 per cent to £689.7 million in the 12 months to the end of June, pre-tax profits slipped to £39.4 million from £48.4 million a year earlier as net costs more than doubled to £14.3 million due to higher interest rates.
Genus cautioned that both currency rates and higher interest rates would affect profits for 2024 as the strength of the pound was expected to lead to a currency headwind of between £5 million and £6 million, while finance costs were anticipated to rise by about £2 million as a result of the “higher interest environment”.
Bosses didn’t exactly sound optimistic about the recovery in China’s porcine market either, which they reckon will continue to be “volatile”. Analysts at Peel Hunt, which cut their pre-tax profit forecasts for 2024 by 8 per cent to £82.3 million, were bullish about the company’s “strong strategic progress” despite headwinds taking “the gloss off the underlying performance”. Investors saw more bad than good in the results, though, with the shares down 172p, or 7.7 per cent, to £20.62.
A sell-off of technology stocks on Wall Street weighed on most major European markets but the FTSE 100, buoyed by a weaker pound, managed to eke out a gain of 15.58 points, or 0.2 per cent, to 7,441.72 and halt a three-day losing streak. The more UK-focused FTSE 250 slipped 67.97 points, or 0.4 per cent, to 18,383.85.
Miners were among the biggest blue-chip fallers as disappointing trade data from China weakened sentiment towards the sector amid concerns over dwindling demand for metals. Anglo American fell by 60½p, or 2.9 per cent, to £20.25½; Rio Tinto by 131½p, or 2.6 per cent, to £48.47; and Antofagasta by 31p, or 2.1 per cent, to £14.65.
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Prudential, the Asia-focused insurer, shed 25p, or 2.7 per cent, to 903½p as it went ex-dividend, while Smurfit Kappa dropped 122p, or 3.8 per cent, to £30.96 after confirming it was in talks to merge with an American rival.
Shares in Synthomer slumped by 16p, or 26 per cent, to 45p — a level not seen since 2009 — after the polymer maker revealed plans to raise £276 million through a rights issue to tackle its massive debt pile. Shares in Safestore, the self-storage company, slipped 57½p, or 6.7 per cent, to an 11-month low of 804p after bosses flagged “some softness in the UK’s business customer segment”. Investors took the update as a sign to ditch their shares in rivals such as Big Yellow, which gave back 31p, or 2.9 per cent, to £10.35. Solid updates from Melrose pushed shares in the former industrial conglomerate up 28¼p, or 5.5 per cent, to 537¼p, while Direct Line zoomed 24p, or 15.8 per cent, to 174p after the motor insurer said it had agreed to offloaded its brokered commercial insurance unit for £520 million.
Off the main market, Directa Plus bounced off five-year lows after the maker and supplier of graphene-based products revealed it had bagged a three-year contract with Liberty Galati, a Romanian steel producer, to provide a solution to treat oily mill scale produced in the manufacturing of steel. Its shares closed up 4½p, or 10.3 per cent, to 48p.
Elsewhere, a trebling in revenues to £1.2 million in the first half of the year, sent shares in blood biopsy supplier Angle up 3p, or 26.1 per cent, to 14½p.
Beazley calms investor nerves
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Shares in Beazley, the FTSE 100 insurer, wobbled for a while as analysts were taken aback by a seemingly worse than expected figure for underwriting success (Patrick Hosking writes).
The combined ratio, a measure of costs and claims as a percentage of premiums, came in at 84 per cent, worse than the 79 per cent pencilled in by analysts.
Despite record first-half profits of $366.4 million and reassuring statements from the company, the shares dived by as much as 9 per cent in the first few minutes of trading.
It was another example of analysts being wrongfooted by the effects of the new IFRS 17 accounting rules, which slow the rate at which insurers can book profits. Calm was restored when Beazley explained that it was sticking with its full-year guidance for the combined ratio under the old standard. The shares bounced to end the day at 538½p, only 2½p, or 0.5 per cent, down on the day.
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Adrian Cox, chief executive, said he was still committed to expanding in cyber insurance, where the company chalked up premium growth of 14 per cent in the first half in spite of a 3 per cent fall in rates. He said that cyber had “exciting” long-term growth prospects.
