Fish farming - or aquaculture - is a tricky market to navigate: the number of species of fish stretches into the thousands and their habitat is unpredictable. In the last six months these challenges have been exacerbated by bad weather and disease, which have created a difficult environment for Benchmark (BMK), a global aquaculture feed, health and genetics specialist. Low demand for the group's sea lice product sent revenue in the animal health division down 41 per cent to £7.2m, while the newly acquired animal nutrition business had a slower start to the year than expected.
Even so, after stripping out sales from businesses acquired in 2016, the group's revenue rose 14 per cent as a recovery in the breeding and genetics business offset disappointment elsewhere. The outlook is also looking up for the health division which is set to launch its new sea lice product in the second half of the year. The total pipeline is also impressive, comprising 81 products that have a total peak annual sales projection of £718m.
Although revenue and adjusted cash profit are expected to keep ticking upwards in the year to September 2017, on a reported basis Benchmark is still loss-making. Higher depreciation and amortisation charges (a result of last year's acquisition of INVE) have dented the bottom line in these numbers and broker Numis expects adjusted EPS to fall from 4.2p to 2.8p in the full year to September 2017.
| BENCHMARK (BMK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 73p | MARKET VALUE: | £379m | |
| TOUCH: | 71-74p | 12-MONTH HIGH: | 110p | LOW: 50p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 3% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 48.0 | -12.6 | -3.1 | nil |
| 2017 | 69.2 | 8.9 | -1.6 | nil |
| % change | +44 | - | - | - |
*Includes intangible assets of £354m, or 68p a share | ||||
