27th May 2014 06:55
LONDON (Alliance News) - Genus PLC said Tuesday it has agreed with Yunnan Shennong Agricultural Group Co Ltd to cancel the companies joint venture plans at the present time.
The animal genetics company said that the establishment of a joint venture will not proceed, following its February deal with Shennong to build and operate a 1,000 sow nucleus farm to support Shennong's expansion.
Genus said that the joint venture will no longer go ahead due to the previously announced current adverse market conditions for pig production in China; pork prices in China have decreased significantly, pushing pig producers in the country into losses.
No investment had yet been made by either party in the joint venture as land on which to build the farm took time to identify, said the companies. Looking ahead, Shennong and Genus said they will continue to discuss future collaboration opportunities as market conditions in China develop.
Genus signed the joint venture agreement with the Yunnan province-based integrated pork processor in February to expand the Chinese firm's pig production operations.
Earlier this month Genus said revenue had risen in "double digits" since the beginning of the year as overall demand for its products and services grew at higher rates than in its first-half, while pretax profit took a hit from lower results in China. At the time, Genus noted the hit on pork prices in the country and said the reduced prices were expected to continue throughout the calendar year.
Shares in Genus last traded at 1,063 pence per share.
By Alice Attwood; [email protected]; @AliceAtAlliance
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