“A lot of companies during COVID-19 are struggling to survive day to day and we can see a 24 month runway”.
In a frank interview, Benchmark Holdings chairman Peter George dwelled deeper into what has gone wrong for the British fish health company but also what lies ahead.
In terms of the salmon industry, the Anglo-Saxons are lagging behind their neighbouring Viking cousins who dominate. But it doesn’t mean that those in the land of Alfred the Great cannot land a punch. Especially when its chairman calls the company a “sleeping giant”.
Restructuring
But there have been difficulties before the battle even started. In March, net debt grew from GBP 65.7 to GBP 91.3 million pounds in 12 months. The group has now started a concise restructuring and cost-savings plan.
“What we did, we sat down in December with new CFO (Septima Maguire) and we wanted to make a business that was profitable in its own right, irrespective of whether new products came through. So when you look at things like our new sea-lice treatment, we have a very high forecast revenue going forward. We didn’t want to rely on that happening for the business to be stand alone profitable,” said George.
“The restructuring was about getting us to that position as soon as possible,” he said adding that he wants the company to focus on “the things we are good at”.
He said that there are a few things that will have to fall into place over the next few months on the disposals but “was reasonably confident” that would happen.
Clear cash runway
“That’ll give us a really clear cash runway,” he said. “A lot of companies during COVID-19 are struggling to survive day to day and we can see a 24 month runway”.
Why do you think the salmon industry has been more robust than others?
“The salmon life cycle is two to three years and we are at the beginning of that in eggs. It’s a short term factor that shouldn’t affect the industry’s purchase of eggs,” he said.
“We’ve for biosecurity facility in Iceland (Stofnfiskur) and its order book full till year end. We’ve got new Norwegian security in Salten now running at capacity at 125 million eggs but we will go to 150 million soon,” he added.
George projected that one risk looking ahead would be that there may be a glut of frozen salmon and a drop in the price, though the company has not seen any evidence that would happen yet.
AquaChile joint venture
Benchmark took back control of the GBP 19 million short-lived AquaChile joint venture in 2019, after Chilean salmon farmer was acquired by Agrosuper.
“There is a lesson there, no matter how good you do your due diligence you don’t always see things coming around the corner because were quite happy with the joint venture as were AquaChile,” said George. “Aquachile was then acquired – in pretty short order”.
“That wasn’t on the agenda at all when we were doing the JV. The acquirer didn’t see the it as being critical to them. There was no point in having a partner who didn’t see the JV as critical. It was useful at the time to have to a local partner but we’ve had to build our own capability, which is fine,” he explained.
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