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UK firm Genus sees challenges as it restocks China pig farms

3 minute read

Pigs are seen at a farm in Neihuang county, Henan province, China, September 12, 2016. Picture taken September 12, 2016. REUTERS/Dominique Patton/File Photo

BEIJING, Feb 25 (Reuters) - British livestock genetics firm Genus (GNS.L) sees potential short-term challenges in its drive to help restock China's massive pig farming industry which has faced a surge in disease outbreaks over the winter, the chief executive said on Thursday.

The supplier to a third of China's top 50 producers with breeding pigs has seen strong growth and gained Chinese market share during a rapid restocking of the world's largest hog herd that was devastated by African swine fever in 2018 and 2019.

Genus' shares slid 6% on Thursday, their biggest percentage fall since May 2020, after the company also forecast lower growth and increased currency headwinds in the second half.

Chief Executive Stephen Wilson said Chinese pig farms had seen "a lot of disease" over the winter, making it harder to keep the firm's pigs healthy, particularly during transport when there is a major risk of virus transmission.

"It's going to make the next few months potentially have some challenges," he told Reuters, adding customers could review restocking plans as a result of the disease outbreaks although Genus had not seen any "major changes" yet.

"The demand side continues to be very healthy," he said.

China's restocking effort helped Genus lift first half revenues by 6% to 285.7 million pounds ($404.6 million), while profit after tax for the period to the end of December was up 26% at 30.3 million pounds.

China's hog futures have rallied more than 10% since launching in January over reports of disease outbreaks. Some analysts estimate about 20% of sows in northern China have been affected.

Genus was considering dedicating a fleet of trucks for transporting its pigs to reduce risk of disease transmission and was looking at developing its own diagnostics to detect infection accurately without producing false positives, Wilson said.

But he said the outbreaks would keep pig prices in China high in the medium term and sustain strong demand for genetics.

"There's still a lot of expansion and a lot of empty farms and still a lot of slaughter pigs that are being rebred as sows which have much lower productivity," said Wilson.

($1 = 0.7061 pounds)

Reporting by Dominique Patton; Editing by Edmund Blair

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