FTSE 250 movers: No appetite for Greggs or Genus

(Sharecast News) - FTSE 250: 19,255.18 -0.02% Animal genetics company Genus cut its full-year profit outlook on Tuesday as it pointed to "very challenging" market conditions in the porcine business in China.

The porcine genetics business in China is now expected to be modestly loss-making in the second half of the year, versus a profit of £8.8m in the first half. As a result, full-year pre-tax profit is set to be lower than the company previously expected.

Genus noted that market researchers are currently expecting a recovery in the China porcine market in the summer as the supply decreases and consumer demand for pork continues to increase, but said there is uncertainty as to the timing of when the demand for porcine genetics will improve.

In an update for the four months to 30 April, Genus said that with the exception of China, it achieved "good trading" in its porcine business, with strong volume and royalty revenue growth, and good operating profit growth.

North America, Latin America and Europe all delivered strong growth in operating profit, it said, while Asia saw a drop in operating profit due to the performance in China.

"Since December 2022 the Chinese porcine market has been weak, reflecting high supply of slaughter pigs following widespread African Swine Fever ('ASF')," it said.

Expectations of a recovery in the market grew in February, when the pig price rose. However, since then the pig price has fallen back below 15 RMB/kg, with continued widespread ASF outbreaks and subdued demand.

"At these prices, producers are unprofitable, and many are not replacing and rebuilding their sow herds at the current time. Due to the volatile porcine market PIC China's trading has been weaker than the first half of the fiscal year, achieving lower revenues, with operating profit also impacted by costs associated with the clearance of inventory at two PIC farms that were infected by ASF in the period."

UK high street food chain Greggs has forecast a strong growth in demand this year, driven by new products such as chicken goujons and potato wedges despite cost inflation and pressure on customers.

Annual profit was expected to grow by about 10% this year as like-for-like sales growth in the 10 weeks to 13 May averaged 15.7% as customers also enjoyed plant-based food such as it vegan Mexican chicken-free bake

"Although we expect to see ongoing material cost inflation, we have good forward cover on key commodities," the company said.

The Newcastle-based chain said like-for-like sales rose 17.1% to £609m in the first 19 weeks of 2023, in part due to the Covid Omicron variant hitting revenues last year.

"Although we expect to see ongoing material cost inflation, we have good forward cover on key commodities. Consumer disposable incomes are likely to stay under pressure, but we remain confident that our outstanding value proposition continues to be compelling," it added.

IT professional service specialist FDM Group said in an update on Tuesday that trading in the first three months of its financial year met expectations, though it saw a slowdown in the second quarter due to prevailing global macroeconomic and geopolitical uncertainty.

The FTSE 250 company, which was holding its annual general meeting, said recent issues in the banking and finance sector contributed to the softer trading across its operating territories.

Despite the challenges being faced in banking and finance, FDM said none of its clients had been directly impacted by the issues affecting a limited number of banking institutions.

However, the general uncertainty prevailing in the sector had led to delays in client decisions over the placement of consultants.

Nonetheless, FDM Group said it was maintaining "encouraging" levels of client engagement, with the board optimistic that confidence in the banking and finance sector would improve as the second half progressed.

As at 30 April, FDM had 4,774 consultants assigned to clients, compared to 4,905 on 31 December, and 4,429 on 30 April 2022.

Despite the slight decrease in assigned consultants, the company maintained a robust balance sheet.

At the end of April, FDM said it had £47.5m of cash, with no debt, compared to £45.5m of cash and no debt on 31 December, and £54.9m of cash and no debt at the end of April last year.

"Benefiting from FDM's scalable and flexible business model, the group has taken appropriate measures to adjust recruitment and training to ensure continued alignment of supply with the current demand for consultants," chair David Lister explained.

"The board's expectations for the group's financial performance for the year are unchanged."

FTSE 250 - Risers

Playtech (PTEC) 634.00p 3.26% Aston Martin Lagonda Global Holdings (AML) 214.00p 2.98% Tritax Eurobox (GBP) (EBOX) 69.30p 2.97% International Distributions Services (IDS) 234.50p 2.67% PureTech Health (PRTC) 213.00p 2.65% Abrdn Private Equity Opportunities Trust (APEO) 454.50p 2.13% Vesuvius (VSVS) 411.00p 2.04% Victrex plc (VCT) 1,549.00p 1.77% Diversified Energy Company (DEC) 90.75p 1.74% Harbour Energy (HBR) 246.90p 1.69%

FTSE 250 - Fallers

FDM Group (Holdings) (FDM) 626.00p -3.99% Capricorn Energy (CNE) 209.40p -3.60% Genus (GNS) 2,476.00p -3.58% Wood Group (John) (WG.) 138.50p -3.55% Greggs (GRG) 2,744.00p -3.52% Currys (CURY) 55.70p -3.38% Genuit Group (GEN) 297.50p -3.25% Marshalls (MSLH) 287.20p -2.18% Watches of Switzerland Group (WOSG) 744.50p -2.04% Bridgepoint Group (Reg S) (BPT) 223.40p -2.02%