Aquaculture biotechnology company Benchmark will, over the next few years, exit or divest several business areas that are not delivering enough return on investment, CEO Malcolm Pye told IntraFish.

In 2019, Benchmark sold some production facilities in China, and exited lumpfish programs in which it was involved. The company has identified another seven or eight areas where it deems investments will not give enough return to the group, Pye said.

“We are focusing on delivering better internal efficiencies," Pye said. "This is exiting those areas where return on investment is not good enough, or areas that are non-core business for us."

The company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of £7.5 million (€8.4 million/$9.5 million) in the first half of 2019, up 25 percent from the year prior.

However, it reported a £9.1 million (€10.2 million/$11.6 million) net loss over the period, down from a profit of £3.6 million (€4 million/$4.6 million) in the first half of last year. The decline partly relates to acquisition accounting credit facilities and an increase in depreciation charges over the period.

Benchmark also reported debt of £65.5 million (€73.1 million/$83.2 million), which was principled for payment of the joint venture the company began with Chilean salmon farmer AquaChile in 2018, and includes a £26 million (€29 million/$33 million) "ring-fenced" non-recourse debt to fund the Salten salmon egg facility in Norway.

The debt also relates to the fact that the company is still building its inventories, Pye said, which continues to drive up working capital.

Progress on ‘ground-breaking’ sea lice treatment

Sales over the period increased 3.4 percent to £78.3 million (€87.4 million/$99.4 million), and the company is now looking at improving its position in key markets and segments with the commercial release of different products.

It plans to launch its next generation sea lice treatment in Norway in 2020, probably in the second half of the year after it has been cleared for commercial use, Pye said. The company will then release it in different European markets before seeking approval in Latin America.

According to Pye, the treatment could be launched in Chile a year later, and works on caligus as effectively as it does on sea lice.

“We are on track with the final stages prior to the launch of this treatment both in terms of regulations and trials,” Pye said.

“The treatment is the most effective method there is, approaching 100-percent efficiency. It differs from mechanical systems currently used which have a very big impact on fish growth.”

The new treatment is applied in baths. So far, trials have shown the fish only needs to be treated once during the production cycle.

The treated water will be filtered before being returned to the sea, allowing for a full separation of the medicine.

In the exit from the JV with AquaChile, Benchmark retained assets and biomass in the country, and its ability to offer its own salmon broodstock and genetics to farmers in the country.

“This was quite a good step,” Pye said. “We had brought stock into the market a year before entering the JV, and that will soon come into production. We’re quite advanced in the country and the market received us very well there.”

In its shrimp division, which makes up for around 60 percent of the company’s business, Benchmark is also preparing for the launch of a “blockbuster” technology product on specific pathogen resistant (SPR) shrimp, which it plans to launch in Thailand this fall, followed by Vietnam and China, Pye said.

Ecuador is still a market where the company is not present, but Benchmark has some business in Costa Rica and other shrimp farming countries in the Latin America area, and plans to enter Ecuador in the future.

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Aquaculture

Benchmark to divest several non-core business areas