DAVY VIEW

Genuit has had a challenging start to the year due to the pressures of lower volumes and input cost inflation. Guidance suggests the consensus operating profit forecast for this year could fall by around 7%. In some respects, it could be argued that a downbeat outlook has been anticipated with the stock down almost 20% year-to-date and one-third lower than where it was a year ago. Moreover, ahead of the update Genuit had de-rated significantly with the group’s current year P/E multiple falling to over 30% below its long-term average. This provides some margin of error, but the wider context is a Genuit business that has struggled for a number of years to generate any form of favourable operational momentum.