Benchmark Holdings reports nascent recovery in seafood

It has been four months since aquaculture group Benchmark Holdings (BMK) declared itself up for sale – and a buyer has yet to emerge. Investors remain optimistic, however, with the shares gaining more than 30 per cent across the year to date.

The market also appeared unfazed by widening year-on-year losses and shrinking sales in the first half, as Benchmark’s stock moved very little on the day of its interim results. Revenues in the group’s advanced nutrition business were down 2 per cent at constant currency to £40.4mn, representing what it deemed a “strong” performance in challenging shrimp markets.

An increase in production costs collided with a reduction in consumer demand last year, leaving the market for the crustaceans in a state of disarray. Benchmark said there is now evidence that a recovery has begun, which has translated into demand for the group’s shrimp hatchery products ahead of an increase in production. 

Meanwhile, sales in the genetics business were down 11 per cent compared with the first half of last year – during which time Benchmark benefited from global supply constraints in salmon eggs. The group’s health division was its worst performer, with revenue down more than a third as it attempts to move to a new business model for its Ectosan Vet and CleanTreat solutions. Both of these offerings are designed to manage parasite infestations in fish farms, which can prove devastating to yields. 

FactSet broker consensus continues to predict positive earnings for next year. But until that time, we’ll remain at hold – especially as the sale question remains unanswered. 

Last IC view: Hold, 35p, 29 November 2023