Shares in aquaculture company Benchmark Holdings (BMK:AIM) sank 5% to 54p on Friday after reporting a 15% fall in full year revenues to £105.6 million, resulting in a 51% drop in operating profits to £7.9 million.

TRANSFORMATION ACHIEVED

Benchmark has successfully restructured the business over the last year, exiting loss-making activities and divesting of non-core activities. The company has made nine disposals, brought in new management and raised £43 million of new capital.

As a result, the company has reduced net debt from £87 million to £37 million and had available liquidity of £83.2 million at 30 September.

CORE FOCUS

The company is now focused on the core activities of Genetics, Advanced Nutrition and Health.

The genetics division, which supplies a range of disease resistant Salmon eggs, saw revenues grow 5% to £41.5 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) rise 43% to £14.4 million.

Strong demand from Scotland and the ramp-up of the firm’s Icelandic production facility improved profitability.

Advanced Nutrition was hindered by the impact of the pandemic on global demand for shrimp, which caused revenues to fall 22% to £59.4 million.

More than 60% of global shrimp demand comes from the hotel, restaurant and catering sector which suffered drastically from the global lockdown.

The company successfully began test-market sales of its SPR shrimp broodstock with continued scale trials in China, Indonesia and Vietnam.

The Health division is focused on the commercialisation and roll-out of the company’s BMK08 and CleanTreat technology which is a treatment for sea-lice.

Following the restructuring of the business the strategic priorities are to return to profitable, cash generative growth and build on the ‘substantial growth opportunities.’

UPGRADE

Numis commented, ‘given the near-term uncertainty we make only minor changes to our forecasts at this stage with adjusted earnings per share moving up by 2%-3% for FY21-23.

‘We reiterate our Buy rating and increase our target price from 68p to 70p to reflect the modest upgrades.’

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Issue Date: 27 Nov 2020