Benchmark confident in full-year amid mixed trading

Aquaculture biotechnology company Benchmark said in an update on Thursday that its third-quarter revenue came in at 6% below the prior year's figure.

The AIM-traded firm said that, while genetics showed signs of growth, revenues in advanced nutrition dwindled due to prevailing slackness in shrimp markets.

However, health revenues remained more or less consistent with the preceding year.

Adjusted EBITDA, which excludes fair value changes from biological assets, decreased 29% year-on-year.

That decline was put down to diminishing revenues, unfavourable foreign exchange rates, and specific challenges for the quarter such as the escalation in third-party production expenses for salmon harvest income.

The board said that was somewhat counterbalanced by continuous cost management.

Its adjusted operating loss, after excluding fair value alterations in biological assets, amounted to £1.7m, which was a steeper loss compared to the £0.7m it recorded in the third quarter of 2022.

The company’s pre-tax loss, however, notably shrunk to £4.7m from £11.2m on an annual basis.

That was largely credited to a substantial drop in net finance expenses due to currency shifts, and mark-to-market changes in the worth of financial derivatives.

Looking at the cumulative results for the first nine months of the year, Benchmark recorded a promising 15% growth in revenue compared to the prior year, fuelled by expansion in both genetics and health.

Advanced nutrition revenues paralleled the prior year’s numbers.

Adjusted EBITDA for the first nine months, excluding fair value adjustments from biological assets, saw a substantial hike of 27% from the previous year, primarily owing to health growth and a robust performance in advanced nutrition.

The adjusted operating profit, excluding fair value shifts in biological assets, dramatically increased in the first three quarters, amounting to £9.7m - a stark contrast from £3.2m at the same time last year.

Its loss before tax reduced significantly to £6.6m from £16.4m, while it reported a marked improvement in operating cash, recording an inflow of £11.2m, reversing from the prior year’s outflow of £2.2m.

The company’s liquidity position remained healthy as well, with cash holdings totalling £32.9m and an overall liquidity, including available facilities, of £45.1m as at 30 June.

Benchmark's net debt, excluding lease liabilities, remained on a downward trajectory, settling at £45.7m as at 30 June.

Looking ahead, Benchmark said it expected trading to align with market predictions for the 2023 financial year, with continual progress in genetics, while advanced nutrition's performance would likely remain under the influence of a sluggish global shrimp market.

Health was meanwhile poised for a boost due to the anticipated rise in sea lice treatments in the fourth quarter.

The company said it would maintain its concentration on enhancing profitability and cash influx, powered by business achievements and integration synergies.

“Our third-quarter trading reflects the anticipated low season for our health solutions in the salmon industry, as well as the continuing adverse market conditions in the global shrimp market,” said chief executive officer Trond Williksen.

“Despite these headwinds we have delivered strong year to date results, with double digit growth in revenues and earnings compared to the prior year.”

Williksen said that for the rest of the year, Benchmark had good visibility in genetics and was moving into the main season for sea lice treatments in health.

“Notwithstanding the prevailing market conditions for advanced nutrition, we continue to demonstrate momentum in our business and the resilience of our diversified business model to face cyclical fluctuations in our end markets.

“We continue our strong commercial focus to ensure the further growth and profitable development of the group.”

At 1027 BST, shares in Benchmark Holdings were down 6.65% at 37.81p.

Reporting by Josh White for Sharecast.com.