Benchmark Holdings, the specialist in aquaculture nutrition genetics and health, has provided a Q3 trading update. As previously flagged, weak markets in shrimp, sea bass, and bream continue to impact demand and pricing for the group’s live feed products. Added to this, the oversupply of lower priced Artemia sourced from Russia meant that a higher proportion of revenue came from lower margin live feed.
Economic factors in Mediterranean markets also continue to play a part in the demand and pricing of sea bream and sea bass, with the consequent knock on effect of demand impacting revenues in the Nutrition division. There are some signs of stabilisation in pricing, although this is not expected to have a beneficial impact in the short term. Meanwhile, sales in the Animal Health division are forecast to be depressed by the accelerated progress of field trials for the group’s novel sea lice treatment that means that fewer trials are required to demonstrate the safety and efficacy of the product.
In addition, whilst progress is being made towards obtaining field trials licenses beyond the leading market in Norway, the anticipated grant of licences in H2 has been delayed. But with trials approaching completion, marketing authorisation for Norway does remain on track for circa the middle of 2020. The company is making good progress on negotiating licensing deals for the nonaquaculture health products that could, if concluded in the short term, offset the expected impact on margin caused by Nutrition and Health operational events.
To weather these headwinds, BMK retains good liquidity headroom by means of its $110m loan note and credit facility. We withdraw our current forecasts pending review and look forward to updating them in due course.