In its interim results released last week, the company reported first half year revenues to March 31 jumped from £48m to £69.2m (US$89.7m), and its pre-tax profits for the six months narrowed to £8.9m from £12.6m for the same period a year prior.
It also said the integration of Belgian fish nutrition producer, Inve, acquired in December 2015, is nearing completion.
We caught up with Benchmark Holdings CEO, Malcom Pye, to hear more.
“We were pleased with our performance. The first half of the year has been about working hard, being in close contact with our customers.”
“However, the shrimp markets in Asia have been in the doldrums in the past while due to disease and El Niño challenges, and we have seen that reflected in our results."
That said, the supply and demand fundamentals have improved, somewhat, on the shrimp side, he noted.
“We are just starting to see signs of recovery in shrimp prices though. We see an increase in prices of 15 to 20% and even 25% in some markets, but it is very early days, so we can’t be sure recovery is secured for the long term.”
"In terms of our advanced nutrition business, we are certainly not going backwards, but we are not growing as fast as we would like to.”
The Belgian headquarters and global operational centers of Inve, under the integration process, have remained intact. “There wasn’t really much opportunity to rationalize the infrastructure or make savings in that regard. We have been focusing on operational synergies and development of new products such as fish vaccine antigens. Some 18 months in, the co-product R&D is going well.”
Genomics, animal health
The good performance of its breeding and genetics division offset the lower earning of the other business areas, he said.
Benchmark has been investing in new innovative products, with a huge focus on animal health, in areas like vaccines, and in the breeding side, it has been ploughing capital into new genetics technology aimed at lower susceptibility to disease. “Genomic tools to identify traits have allowed us to make great strides.”
The company said preparations are advanced for the launch of disease resistant shrimp breeding stock from the program acquired from Ceniacua in the second half of last year. Commercial trials of the stock are being prepared in six of the major shrimp producing countries in Latin America and Asia.
In March, the company signed a long-term collaboration agreement with Salmar ASA, to provide breeding and genetics services and products related to Atlantic salmon, including R&D activities and production of salmon eggs.
Its next generation sea lice treatment, targeted at the salmon sector, is in the late stage of development with field trials due in 2017. “This is a breakthrough product in terms of reducing the impact of the release of such treatments into the environment," said Pye.
Mechanized sea lice removal systems have been gain traction in the salmon market and there has been notable lower demand for sea lice control drugs, including Benchmark's existing product Salmosan. “However, mechanical removal is expensive, and the industry will still need new sea lice treatments to fall back on," he said.
The company sees the new treatment as being complementary to Salmosan as it is will "enable more rotation of sea lice treatments and hence promote efficacy."
He said the company is investing a lot in probiotic technology, using a combination of strains, in both fish diets as a tool to enhance gut health and to support antibiotic reduction as well in water treatment for environmental management.
“We see huge industry interest in probiotics at the moment,” said Pye.
In May, Benchmark signed a contract with Thailand’s largest tilapia producer, Manit Farms, to distribute a range of Inve products including a biocide, a water treatment product, and a feed probiotic. The company said similar combined business developments in the tilapia market are in progress in Asia and Latin America.
Benchmark is also looking at developing next generation replacement diets for Artemia, said the CEO.
Artemia is a primary feed for larval stages of various shrimp and fish species commercially farmed throughout the world. Commentators say increasing demand globally for Artemia could make its supply and availability a bottleneck for the future growth of aquaculture. As supply is based on harvests of wild populations, it is unpredictable and subject to considerable variation due to factors such as changing environmental conditions.
“We have managed to replace around 80% of Artemia in juvenile shrimp diets with equal or better performance seen at the grow-out farm stage. Our aim is to reach 90% substitution level. We feel we are making great progress.”
The major customers of Benchmark Holdings are the larger Asian integrators. “While we work with 90% of the biggest players, aquaculture in Asia is also made up of thousands of small farm holdings, there is a lack of consolidation at that scale so we work with distributors in each market to target the smaller producer.”
He said growth in China is constrained, but the momentum is there now to tackle the environmental and other challenges in its aquaculture sector.
Thus, in relation to short-term growth, the company is looking to Asia, but in the medium to long-term expansion opportunities, it sees Latin America as the upcoming market.
“Countries like Ecuador, Brazil and Colombia offer ideal conditions for aquaculture but the sector is under exploited.”