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Benchmark sees long-term growth in aquaculture

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What Benchmark Holdings does

Benchmark Holdings PLC (LON:BMK) has three core divisions, genetics – which includes salmon eggs with traits such as disease resistance, growth and quality.

The Advanced Nutrition division specialises in feeding the young animals including probiotics to build resilience through the early life stages, while Animal Health tackles serious issues such as sea lice in fish farming.

The company believes its new sea lice medicine together with its purification system, CleanTreat, have the potential to be transformational for the industry, providing a solution with “zero environmental impact to one of the industry’s biggest challenges”.

How it’s doing

In November, the company said it ended its financial year in a significantly stronger financial position after its programme of asset disposals.

Liquidity at the end of September 2020 was £83.2mln, the company revealed in its fiscal fourth-quarter update, which was an improvement on the end-June figure of £67mln.

Net debt at the end of September stood at £37.6mln, versus net debt three months earlier of £54.7mln.

The group said its restructuring is now complete, with £44mln raised from five divestments in the three months to the end of September.

The trading performance in the quarter reflected continuing good performance in Genetics supported by relatively stable salmon markets offset by the impact of ongoing weak shrimp markets in Advanced Nutrition.

Revenue from the Advanced Nutrition division tumbled to £12.1mln from £22.0mln the year before – all 2019 figures were restated to reflect changes in continuing operations.

The Genetics division grew revenues to £11.8mln from £10.0mln in 2019 while the Health division saw its revenue shrink to £1.4mln from £3.8mln.

Group revenue in total fell to £25.2mln in the fourth quarter from £35.6mln the year before. Revenue for the whole year was £105.6mln, down from £124.0mln the previous year.

Adjusted underlying earnings (EBITDA) from continuing operations was £4.6mln, versus £9.7mln the year before. Full-year adjusted EBITDA declined to £14.5mln from £21.3mln in the prior year.

Benchmark said the lower EBITDA was a result of lower group revenues and margins in Advanced Nutrition, which offset higher revenues and margins in Genetics and a reduction in operating costs and research & development expenses from measures taken during the coronavirus (COVID-19) pandemic.

What the boss says

In its full year results, Benchmark’s CEO Trond Williksen said 2020 was characterised by the successful delivery of “an ambitious and necessary restructuring programme”, and, of course, the response to the coronavirus pandemic.

“Our results reflect a mixed performance across our business areas with a strong performance in Genetics offset by the effects of the restructuring programme and the impact of Covid-19, especially on the global shrimp markets,” Williksen said.

“Moving into FY21, our focus is on becoming profitable and cash generative. Following the restructuring, we are well-positioned in an exciting aquaculture industry, and we have significant potential to be realised in the years to come,” he added.

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Blue Sky

Fundamentals remain firmly in the company’s favour: 

The fishing industry has just about reached the limit of what it can catch in the sea and might even be in decline

Seafood is increasingly acknowledged as an essential component of healthy diets

The growing middle-classes in the southern hemisphere, traditionally a fish-eating culture, are spending evermore.

A growing global population needs more food to be produced from the water

Is there a bubble in financial markets?

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