Release Date: December 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Benchmark Holdings PLC (BHCCF, Financial) has concluded a strategic review and signed an agreement to sell its genetics business to Novo Holdings, which is expected to strengthen the company's financial position.
- The sale of the genetics business will enable Benchmark Holdings PLC (BHCCF) to pay down expensive debt and return significant capital to shareholders.
- The company has managed to reduce operating costs by 15% throughout the year, demonstrating effective cost management.
- Advanced Nutrition showed resilience with a 5% growth in constant exchange rate despite challenging market conditions in the shrimp industry.
- The health business is now positioned as a smaller, profitable, and cash-positive entity, with strong sales from Salmosan and Purisan products.
Negative Points
- Benchmark Holdings PLC (BHCCF) experienced a 7% reduction in total group revenue in constant exchange rate compared to the previous financial year.
- The health business saw a 41% decline in revenue due to restructuring and the exit of Ectosan and CleanTreat from the market.
- The company reported an operating loss for the year, partly due to impairments totaling GBP15.3 million.
- The shrimp market remains challenging with low farm-gate prices affecting customer demand and product mix, leading to lower margins.
- The company anticipates a soft Q1 for the next financial year due to continued challenging trading conditions and the loss of a significant customer in Venezuela.
Q & A Highlights
Q: Will Benchmark Holdings be maintaining a normalized debt level after paying down all debts? Can you provide any long-term margin targets under the new structure?
A: Septima Maguire, CFO, stated that the objective is to operate as a deleveraged business with flexible debt facilities to support normal business operations. Long-term leverage targets have not been deeply explored yet. The focus is on maintaining a strong balance sheet and facilities. For margins, the company aims to return to previously guided targets, especially in nutrition, and to reduce the margin drag from corporate costs.
Q: Was disposing of the genetics business always a priority in the strategic review?
A: Trond Williksen, CEO, explained that the process was open-ended, and they received offers for all business areas, including the entire group. The decision to sell the genetics business was made as it was deemed the best solution to develop further value from the remaining business areas.
Q: What are the priorities for Benchmark Holdings after the transaction?
A: The priority is to focus on the development of the two remaining business areas, close the transaction, and streamline the organization to fit the new setup. This involves reducing costs and optimizing operations to be more efficient.
Q: What will be the species distribution for the group post-transaction?
A: The focus will shift away from salmon, which was significant in the genetics business. Shrimp and a wide range of marine fish will become more prominent, with less emphasis on salmon, except for some related to Salmosan and Purisan.
Q: Can you indicate a range for the expected dividend payout to shareholders?
A: Septima Maguire, CFO, mentioned that while they cannot provide an exact number yet, the intention is to return significant capital to shareholders. The magnitude can be estimated based on the gross proceeds from the transaction and the debt repayment plans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
