As a result of continued weaknesses in the shrimp markets, an oversupply of Artemia and the early impact of the COVID-19 pandemic, which overshadowed a robust performance in the Genetics business, Benchmark reported revenues from continuing operations of £57 million (H1 2019: £67.4 million) and an adjusted EBITDA from continuing operations of £2.8 million in H12020 (H1 2019: £7.3 million).
Advanced Nutrition reported H1 revenues of £31.3 million, 23.5% below the prior year (H1 2019: £40.9 million) and Q2 revenues of £19.9 million, 20.5% below the prior year (Q2 2019: £25.0m). The company began to experience the impact of COVID-19 in the Advanced Nutrition business in Asia towards the end of this period.
“An estimated 60% of demand for shrimp derives from the food services sector which has been critically affected by the global lockdown. The seabass and seabream sectors have a similar exposure but the longer production cycle reduces volatility and impact has been modest. In salmon, by contrast, 70% of demand is represented by retail, which tends to benefit from the lockdown measures with an increase in home consumption of salmon in certain markets including the U.S. Besides, 2.5-3-year production cycle in salmon means that demand for salmon eggs is less affected by the short-term impact from COVID-19,” the company said.
Impact in the shrimp market
In addition to the fall in demand for shrimp, which drove down the shrimp price and resulted in reduced production, curfews and regional quarantines in major producing countries affected production volumes. At the same time, the sector experienced transportation lockdowns across the supply chain from hatchery to nursery, grow-out and end markets which increased economic pressure across the value chain, impacting farm gate prices and stocking decisions.
The company said that this reflected an ongoing weak shrimp market with low shrimp prices, continued competition in Artemia leading to significantly lower Artemia volumes and prices. The impact from COVID-19 was initially evident in China and Vietnam, later extending into India and Indonesia, and more recently into Latin America as the pandemic spread across the globe.
“We expect market conditions in shrimp and the operational and economic effects from the COVID-19 pandemic to continue to impact our Advanced Nutrition business for the rest of the financial year. Encouragingly, Genetics business continues to perform robustly reflecting a more stable demand for salmon and we have good visibility of the order book for the rest of the year. We are in a solid financial position following the net £42m fundraising earlier this year and expect that the measures we are taking to maintain our production and commercial functions and to conserve cash, will enable us to remain resilient during this period,” the company said.