Benchmark Holdings PLC
LSE:BMK
Earnings Call Analysis
Q1-2024 Analysis
Benchmark Holdings PLC
Benchmark's Q1 was filled with decisive actions amidst an ongoing strategic review of the company which started in January, aimed at revealing and realizing the full potential of its global industry position. Despite the review's details remaining undisclosed, progress has been made across various areas, driving the 16% compound annual growth seen over the past three years. The expectation is to continue this growth trajectory based on the strengths of their technologies, services, and products, particularly in the aquaculture industry.
Q1 revenue saw a 26% decrease to GBP 40.5 million compared to the previous year's strong quarter but marked an 11% increase over the last quarter, indicating sustained momentum. The Genetics and Nutrition areas largely met expectations, while the Health division underperformed due to unexpected cancellations. Consequently, Benchmark is shifting towards a less capital-intensive model for Health. The EBITDA margin stood at 18%, with a strong balance sheet featuring GBP 24.2 million in cash and GBP 36.4 million in available liquidity.
Despite a normalized volume of salmon egg sales due to the supply market dynamics and an isolated ISA virus incident, Genetics performed solidly with a 28% margin. The company noted growth in Chile and shrimp genetics, aiming for profitability and further integration with Advanced Nutrition to drive cost synergies and market penetration.
Benchmark's Advanced Nutrition demonstrated robust performance despite a continuing soft shrimp market, with a 24% EBITDA margin and effective cost management. Strong performance in the European marine fish markets highlighted the division's capacity to navigate challenging conditions and prepare for future market upswings.
Due to cancellations from fish health issues, the Health division faced setbacks, triggering the transition to a less financially exposed business model. This includes decommissioning a vessel and promoting integration of the CleanTreat system into future well boats. Despite these challenges, the underlying need for environmental and gentle treatment options, such as Ectosan Vet and Salmosan, remains strong.
For the remainder of the year, Benchmark anticipates revenue and EBITDA to improve, especially in the latter half. Focus will be on growth vectors within Genetics, while Advanced Nutrition and Health will aim to fill capacity and complete the business model transition. The company remains confident in its ability to navigate the complexities of the market and the operational changes underway.
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Good morning to all of you, and welcome to this quarterly presentation for Benchmark. I'm Trond Williksen and I'm here, as usual, with our CFO, Septima Maguire. And we're going to take you through a normal procedure program, starting with highlights, moving over to more granularity on the business areas before Septima is going to take you through the details of the financials, before we're ending the presentation with sharing overviews of the year that we're in. Of course, at the end of the session, there will be an opening for questions. Before I start, and as all of you know, we launched a strategic review including a formal sales process for the company in January. This is, of course, our process that is ongoing. And I will not be commenting on that process during today's session. Further announcements will come, of course, when it is appropriate. Then over to business as usual. And let me start out, assuring everybody that the first quarter of the year has been a very active one for us in Benchmark, where we feel that we have managed to take many decisive actions and achieved a lot. Some of these actions are, of course, reflected in the numbers of the quarter that I will come back to in a minute. And some of them are more related to the long-term work that we're doing on the journey that Benchmark has been on over the last 3-plus years and it's still on to make sure that we're taking out the large potential that is in the group as a whole as well as in the different parts of the group. And it is in this perspective, you should see the group. We have a unique company that I'm particularly proud of, uniquely positioned in a growing global aquaculture industry that poses a lot of opportunities for growth for those companies who are lucky enough to be well positioned, and Benchmark definitely is. With our 3 business areas, where we hold market-leading positions in what we do, providing highly specialized mission-critical products and solutions to the whole agriculture industry, products and solutions that are critical and mission-critical also to the industry to take out the industry's potential becoming as sustainable as it should and could be in the future. And it is in the unique -- and it is the unique positioning of the company, together with our actions over the last years, that has led to the more than 16% compound annual growth of the company, that we have seen for the last 3 full years. This is also a trend that we expect over the medium and long term as we see our technologies, our solutions and products as key to the growth to the aquaculture sector. Let me move over to summarize some of the highlights of the quarter, a quarter where we have been able to keep the momentum and deliver to our expectations in the 2 main business areas: Genetics and Nutrition. At the same time that we have taken decisive actions to transit to a less capital-intensive business model in our third business area, Health. The latter, we have been talking about to the market for a long time. In terms of numbers, Q1 revenues ended at GBP 40.5 million. This is 26% below a strong first quarter last year, with 11% above over last quarter, Q4 in '23, showing that we're maintaining a quarterly momentum. Out of the gross revenues for the group, Genetics contributed GBP 15.2 million. This is actually a solid performance and meeting our expectations seen against, again, a strong Q1 last year, where the company benefited from supply constraints of salmon eggs in the market in Norway. Advanced Nutrition revenues were GBP 19.3 million. That's, again, 13% about -- above our last quarter, Q4 in '23. And over time, I've talked about the strong performance in our Advanced Nutrition business, the team in INVE. And again, this quarter is reflecting a good performance in the context of our continuous soft market. And finally, Health revenues ended at GBP 6.1 million, which is lower than we anticipated when we were standing here in November as a result of biological challenges that was faced over certain customers, leading to cancellation of good orders for Ectosan Vet and CleanTreat in December. And this significantly impacted the result we show for this business area in the period. And as I will come back to, led to decisive actions to start migrating to a less capital exposed, more sustainable business model for this business area. Due to lower revenues and despite that we have obtained reduction in our operating cost over adjusted EBITDA, including fair value -- excluding fair value movements, ended at GBP 7.5 million, this is equivalent to 18% margin. However, it's pleasing to note that the margins in Genetics and Advanced Nutrition have improved compared to a year ago. Balance sheet remains strong with cash flow of GBP 24.2 million and available liquidity of GBP 36.4 million. Net debt, excluding lease liabilities, ended at GBP 57.5 million. And as Septima will come back to in her session, this is a quarter that typically has the heaviest cash commitments during the year. Moving on to give more granularity on the different business areas, and let me start, as usual, with Genetics, where we have landed a quarter in line with our expectations with what we consider is a solid performance in our core genetics business and a good progress in our growth vectors. As clearly stated in our full year presentation in November, we did not expect to see the same volumes in salmon egg sales in this Q1 as we did in Q1 last year, due to the circumstances that we had back in Q1 '23 when we benefited from shortage of eggs in the Norwegian market. The 86 million eggs that we have been selling in Q1 is reflecting a more normalized volume in this quarter of the year. And the result we show from our core salmon genetics business is besides reflecting this more normalized salmon egg sales, also reflecting somewhat lower periodic income from harvested fish than last year's, but also an increase in income from our genetic services that we're building up. These are not still too big numbers, but we see that these genetic services -- we see these genetic services as a business that will gradually grow over the coming years. And it will be an attractive business, both from a profitability perspective being a service activity as well as it will enforce our position with our customers. A key element in our strategy in our core genetics business is to move towards more differentiation of our products, building in trade, building in new technologies to make sure that we can differentiate and justify higher value of the genetics that we see today. This was also a topic that I addressed in my last presentation. A huge value creation potential sits within this in the coming years. This is also why we have a deliberate strategy and had that for a while to strengthen our efforts to take out this potential, building a scientific team with world-leading competence led by Ross Houston. In this area, we continue to progress our work both on the previously announced sterility project as well as positioning to be at the forefront of gene-editing technologies. As I stated last time, and I can restate it now, we believe these areas will be critically important in the future, specialized genetics to aquaculture. And we expect to see results of this work that we're doing in the years to come that further would justify and visualize a fair valuation of what genetics provides to the aquaculture industry. While these new technologies remain in development and as a first step on the way, we have also post-period launched new specialized and premium lines of genetics into the market. These lines are based on innovation in our existing technologies, including genomics and cryopreservation. And they're done to optimize our genetic design and focus our selection intensity on trades that give the most benefit to our customers. As I said, this represents a first step on the way to introduce further specialized value-accretive genetics into the market. Moving over to the growth vectors in genetics. We continue to see increased commercial traction in Chile. It translate into revenues of GBP 0.9 million in the quarter, taking us closer to profitability. And the growing commercial traction in Chile is underpinned by new customers coming in, repeat orders and it's on the back of our growing confidence in the market of the performance of our Chilean salmon strains. We have a good and we know that we have a competitive product in the market and the industry is starting to recognize that. Sales of shrimp genetics were broadly in line with what we did prior year, 0.3 million. A key element in the actions that we have taken in the last quarter has been the integration of shrimp genetics across Genetics and Advanced Nutrition, driving commercial synergies and cost savings. We have been talking about that for a while. And we have now managed to execute on this in a successful way, finally, taking decisive steps combining the unique commercial network that we have within Advanced Nutrition with leading genetics components and capability that the group is possessing. The immediate effect of that is, of course, cost synergies. Longer term, the combination will enable better market penetration and ability to combine an offering of world-leading genetics and early-stage nutrition, supported by our excellent technical and commercial teams. This is an offering at scale that nobody else has in the market. Finally, on the main points for Genetics, just to mention the incident that we had post period, when we reported an isolated incident with detection of ISA virus on one fish in our facility in Salten, the tank containing the affected one fish is an isolated tank with unique fish group with separate water systems and farming equipment. We have been working closely with the Food and Safety Authority on the issue since the incident. And despite rigorous testing, there have been no further signs of ISA in the facility or in the specific tank where the one fish originated. All the fish in the tank were cult, so they're taken out. We do not expect the incident to impact our delivery capability. We have accessible broodstock from all the fish groups in the facility as well as access to additional supply of eggs for our multiplicator in [ Bodø ], which we have been working with for many years and from our own facility in Iceland. Moving over to the slide that we introduced quite a few quarters ago, that gives a financial overview of different part of the Genetics business. And we have presented this slide to give you a transparent insight into the contribution from the different elements in our Genetics business. The numbers that we show here is, of course, now including the group allocation of central costs that we apply as a running business. I'm not going to repeat the numbers. You can see them. But as you can see from the financials, the core Genetics business is reflecting a more normalized sales of eggs for the quarter, upholding the margin of 28% compared to a similar quarter last year. You can also see the mentioned progress that we have had in Chile and on shrimp reducing the loss and the gap towards profitability for both those business areas and this is -- has been, and it's still a very important focus for us. And finally, you can see the growth in Genetic services, which we now have chosen to carve out as a separate column. Since this is an area that we're focusing on growing and we expect to generate more substantial numbers in this area in the years to come. This is a profitable business where we now also have introduced offering our very competitive genotyping typing services to our clients around the world, which will add to the dimension of this part of the Genetics business in the time to come. Then moving over to Advanced Nutrition in INVE, which is the well-known brand of this business in the market. Here we're again demonstrating a very strong performance in a soft market. And we keep very well positioned for when the market again is turning. I have told you many times that I'm very proud of the very competent team that we have in Benchmark. And I also told you how impressed I'm in particular with how we have been able to perform in our Advanced Nutrition part of the business, despite soft shrimp markets that we now have experienced for more than a year. Market-wise, 2023 was difficult. And for those of you who want to check, just go to independent sources, and you will see that very clearly stated. And the soft market conditions in -- particularly in the shrimp market has continued into financial year '24. Despite this, we have uphold our performance in Advanced Nutrition. This is also reflected in Q1. Top line is up compared to last quarter, Q4, which illustrate that we have kept the momentum over the last months. Compared to first quarter last year, we're slightly down on top line, 7% in constant exchange rate. But given the market conditions we're working in, we know this is a very strong performance. And those who are working in the same markets, for sure, will recognize this. If you do a more granular look at how we have been performing, we see that we have a very strong performance in the European marine fish markets. These markets have not been easy either, but we have continued to perform regardless. Where we see the biggest challenge is in the soft shrimp markets that we've talked about, where production regions, I would say, with the exception of Ecuador, is struggling and lowering the production. And that, of course, has an impact of our accessible market, so we need to work harder in order to keep up the speed. The fundamentals behind the shrimp market remains the same. Macroeconomic factors depressed the demand for shrimp in end markets, and this includes all markets. This will eventually turn. When this is happening, it's difficult to predict. But with our current organization and momentum, we're sure that we will be very well positioned when this is happening, when the upturn comes. I would also like to mention the ongoing work on innovation and technology that we have in INVE, SnappArt that we had mentioned before is the latest launch. This has been a success in the market. And we're currently -- we have currently more demand than we have -- can supply. So that's a good sign. This is, for me, a good example of how we work, adding technology and technology services to our offering, making sure that we help customers to perform better. And this is, over time, strengthening our market positioning, paving the way for further penetration to increase share of wallet, but also, of course, new customers. Finally, on Advanced Nutrition, our efforts to be agile and adjust to market conditions. We're constantly seeking efficiencies, making sure that we have a setup that is adjusted to the reality and market reality and being as efficient as possible. A good illustration of the effects of this continuous tuning and we're tuning constantly is the development of the adjusted EBITDA margin that has increased to 24% despite the slight lowering of top line that we have seen compared to first quarter last year. Finally, over to Health, which is the area where we have taken the most decisive actions over this quarter. While we had good treatment volumes during November, we experienced that fish health issues by certain customers, being PD, BKD, general weak fish health in Norway, led to cancellations of what we thought was good orders of treatment with Ectosan Vet and CleanTreat in December. This was hitting us hard in the month, and we were left exposed with 2 capital-intensive systems and vessels, including full manning, sitting idle for a whole month. This illustrates the challenge that we have been talking about around the current setup for our CleanTreat solution, the unique technology for environmental friendly cleaning of treatment water from medicinal treatment of sea lice in the salmon sector. The current configuration leaves us with an exposure in periods where you have fluctuations in demand, for instance, due to fish health issues that prevents a normal operation to go and prevents farmers to use the system. Given now the experience we have for more than 2 years since we introduced the solution, we have, therefore, taken decisive action to migrate the business model. I've been talking about this for several quarters. One vessel is now decommissioned. So we're left with one system operational in a transition period. As I've also been talking to you about before, the ultimate business model that we're seeking for Ectosan Vet and CleanTreat is no financial exposure to the CleanTreat system. The long-term solution that we have told you about for a long period is to get the CleanTreat system, the cleaning systems integrated into the future well boats owned and operated by customers or service providers. We have done the groundwork to make that happen, and the design of certain system is in place through the partnership agreements that we have entered into with the leading well-boat equipment provider, MMC and the leading well-boat designer, Salt. And together with them, we're in the market promoting this solution as part of the offering on new well boats in the market. As alluded to or told in our year-end presentation, we're also working on an alternative barge solution that will take down the cost of our solution for the farmers. This is a critical issue. The cost of a barge is significantly lower than of PSV that we have used as a platform for the CleanTreat systems till now. Thus the infrastructure cost of such a solution will be significantly lower than the current setup. We're currently doing technical configuration of such a solution to be offered to the market during the winter and spring. But also with this solution, our assumption now is that the infrastructure investment and costs should be carried by the farmers and the customers, leaving us with no exposure to the infrastructure cost and CapEx. As part of what we have done also during Q1 and into Q2 is to adjust the health organization to reflect the migration to a new business model. These actions are already taken and is expected to lower the operational costs of the health organization in the periods to come. After having said all this, let me remind you of one thing. The need for Ectosan Vet and CleanTreat as a solution for the industry has not changed, I would say, value to the contrary. Sea lice remains, in my view, the largest sustainability issue of the industry. I mean now it's causing many of the fish health and fish welfare issues, that eventually shows also in the high mortalities that the industry is faced with at the moment. Also, the feedback we're getting from our customers using the solution confirms the initial value proposition around the solution. It is very efficacious. The medicine is very efficacious to kill sea lice. It's ideal for fish welfare and fish health as the medicine do not impact the fish and do not create mortality. It also prevents unnecessary loss of feeding as the fish go directly back into feeding after treatment. So what we're -- what are we doing? It is to adjust the business model to what is right for us as a provider of a solution as well as for the customers, taking down the financial exposure we have and the exposure that we should not have as a medicinal provider and providing a less costly solution to the customer. The potential of a solution remains the same. Finally, at the end, just a few comments on Salmosan, who keeps on getting a new life as an efficacious solution also in combination of complementary to Ectosan Vet. Sales of the medicine has continued to develop in all regions, skewed a little bit to the regions where we have a little bit lower pricing. Our belief in the Salmosan solution has grown -- to be honest, has grown over the last 3 years, and it continues to grow, especially since we now see that new regions are coming into play that definitely need that solution going forward. So with these words on Health, I finish my long introduction and leave it up to you, Septima to go through the financials.
Thank you, Trond. So on this slide, we have, of course, the quarter 1 results with the comparators for last year, but we also have the quarter 4 just to show you the evolution of the business as we move from the last financial year into this financial year. But of course, I will, of course, be speaking to the quarter 1 results. So as Trond referenced, we didn't benefit from the very strong quarter 1 that we had last year, but this is as we expected. Predictability is one of the things we strive for within Benchmark. And we definitely saw that within our Nutrition and Genetics business. It was as we expected, which is a very strong point to bring out. It was a disappointing quarter for Health, but that was factors outside of our control. So as we see it, revenue did drop in the quarter versus last year by 26%, but overall, was a good outcome relative to the trajectory of the revenue from quarter 4. From a gross profit perspective, the gross profit of 18.4% represents a gross margin, which is flat versus last year of 45% and this was a good outcome. But also more importantly, excluding the Health part of the business, gross margin would have grown from 42% to 49% within quarter 1, and excluding the Health. So we have actually made significant margin improvements within our Genetics and our Nutrition business. It's also important to note from a gross margin perspective that in the Genetics business, that gross margin is impacted on the volatility of accounting for the biomass, which does sometimes create volatility quarter-on-quarter within our Genetics business. So I would ask you to look at and when you look at the Genetics business margins, you look at it on a last 12 months basis. When you look at our R&D, there's a lot of hidden secrets within our R&D. At first, it looks like it's flat or slightly better. We've been investing quite a lot in R&D. Trond alluded to the R&D programs that we have within our Genetics business area, and there has been a scale up in terms of the activities. But within financial year '23, there was a lot of activity to work smarter. And ultimately, to do more in-house to get better utilization of our R&D spend, which we can see has created flat R&D, but ultimately, will create better outcomes from an innovation perspective in the future. Again, with our operating costs, we have -- because of the fact that we had reduced activity and lower levels of sales, a very strong focus on cost and in all of our business areas everybody was very circumspect in terms of spending money. If you don't -- the rule in Benchmark is, if you don't have it, you don't spend it. So you can see that coming through in terms of our operating costs, reducing quarter-on-quarter versus last year. Now all of these pieces created adjusted EBITDA of GBP 6.7 million, including the fair value uplift, with GBP 7.5 million, excluding the fair value uplift, which is a noncash item. And also, it's important to look at the adjusted operating profit, excluding the fair value movement of GBP 0.6 million, slightly positive but basically driven by the reduced activity levels that we have. Also, I would draw your eye to the exceptional costs that we had in the period of GBP 0.5 million. So these were driven by the restructuring of our shrimp genetics program, amalgamating it into our Nutrition business area from an operational point of view. It's important to note within this financial year, we will continue to report the shrimp genetics program within the Genetics business area, at which point it will move and become part of our Nutrition business area. The comparator exceptional costs all relate to the costs associated with the Oslo listing and establishing that. So -- well, moving backwards and moving on to the next slide to look at the cash generated from operations. As Trond noted at the very beginning, quarter 1 is always a difficult quarter from a cash-generation perspective. And as we always have 2 payments under our take-or-pay contract within Nutrition business, these payments totaled for the quarter $12.4 million, whereas within the comparator period was $5.8 million. This increase is due in essence to 2 factors: lower sales within the Nutrition business within the previous financial year and also the quarter and also inventory levels. And so this effectively creates a higher balance in payment for this contract relative to last year. And of course, this coupled with lower sales levels in quarter 4 and then also quarter 1 has resulted in reduced cash flow in the period. From a CapEx point of view, CapEx of GBP 1.1 million was quite moderate. It was mainly CapEx for -- maintenance CapEx for our facility in Iceland and then also CapEx for our nutrition facilities in Thailand and the U.S. part of the business. Interest and taxes, that was mainly taxes of GBP 1.2 million and interest of GBP 2 million. The taxes related primarily to our tax associated with our Norwegian Genetics business. And of course, the interest was driven by the interest on our Norwegian listed bond primarily. And -- but included within that was also interest associated with the lease of our vessels. So in terms of our leases, as Trond noted, we made the decision to decommission one of the vessels to bring down the capital intensity of the Health business. Now whilst we're still going to see some cash effect in quarter 2 as we pay it to demobilize the vessel and also to lease the vessel whilst it's demobilized, the absolute impact on a quarterly basis for not having that vessel will be GBP 1.1 million per quarter. So this is what we speak to when we talk about decisive action to manage cash and manage our business by taking down the capital-intense nature of that business. So with cash of GBP 21.2 million in the business at this point and available liquidity of GBP 33.4 million as at the 13th of February, we feel that we're really still very strongly based to manage the business as we move forward to continue to grow and meet all of the challenges that we face as we grow the business. So back to you, Trond.
Thank you, Septima. And then let's move over to the outlooks from where we're today and for the remainder of the year. In short, we're trading according to our expectations for the year. We have a very busy year, where we have been able to take decisive actions and done a lot with the business in the first quarter, and we will continue to do that during the year in our efforts to make sure that we take out the potential of the group as well as in the different parts of the group. In Genetics, we have good visibility of the revenues. It's orders that are predictable throughout the full year. As I said very clearly, we do not expect that the reported ISA incident in Salten will affect our delivery capability for the year. We have available eggs from other fish groups in the facility. We have access to the eggs from the multiplicator, [ Bodø ] in Norway, and we have eggs from our facilities in Iceland. So that will not impact our results and delivery over the remaining part of the year. We're very focused on our growth vectors. Shrimp and Chile had good progress over the first quarter in the year. This has been a focus for us over time. And our aim is, of course, to continue to close the gap to profitability and get that profitable as soon as possible with those growth vectors that are, I will say, very well positioned. Genetic Services. This is the first time I really talked too much about it. It's an interesting part of our business. It's always been there, but it's been very small. We expect that, that will become a bigger part of what we do within Genetics over the coming years. We have a unique capability, a unique competence to run Genetics for different species around the world on the basis of our technologies or our competence. And we're adding new services into that business. And we expect that, that will start to show as a profitable business with a bigger magnitude, still from a low base this year, but going forward into the future, it will become a more sustainable -- or substantial business. Advanced Nutrition. I told you about how I'm proud of the performance that we have been able to do in that business area, despite the soft market conditions that we have been through in more than 1 year. It's a tremendous effort. And I know that those who are in the same markets, working in the same market as us, they know and they will recognize this performance. And we continue -- we expect to continue to perform well in what is a difficult market. And we don't bet on a sudden change of that market. We're focusing on making the most out of the market as it is. And this has shown to be a very effective policy or thinking over the last years.
And then, of course, we're very sure that we're -- with the current setup, we have in Advanced Nutrition that we're extremely well positioned when the markets again starts to pick up. And we're early to get to know that because we're in the phase, where we will see the stocking is going up again. And it will come up again from the levels that it has been over the last year. In Health, we will be focusing on filling the capacity of the remaining CleanTreat vessel. We will be focused on migrating to a new business model. We think that is the right model, and I'm sure of this. We will, of course, focus to keep the cost at a sensible low level in the transition period towards the new business model. We also expect that Salmosan will continue to perform as it has done over the first quarter and over last year. It is a solution that has got a new life and that is becoming important in the suite of solutions, complementary to Ectosan Vet, but also complementary to other sea-lice solutions. So with these words on the outlooks, I -- we're ending our presentation, and we're opening up for questions. So thank you so far.
Thank you. And we're are then ready for questions. We have a couple of questions already from our online audience. [Operator Instructions] Before we take the questions from the audience online, are there any questions from the audience in the room?
Can you talk about the SnappArt product? What it is and how it changes your business model or how you interact with your customers?
Well, It is a technology that enables our customers, which are hatcheries, just to be very precise in detecting where the live feed is, how the live feeds are in the early stages. So they can be extremely precise in the feeding. So instead of having this done as it historically has been done by -- through a microscope and then you have to do all these kind of calculations to 2 days, they get it in a split of a second. So they get a much more precise picture of how live feeding is evolving, how the different stages in the live feeding is evolving. This, of course, makes them much more precise in their feeding. So it's just another example of how we work with our customers. We're not providing only, this is the live feed you have and just use it. We're very close to our customers, making sure that they apply our product solutions in terms of our nutrition and live feed in the most precise way. So we're basically helping them to perform better. And then they know that we're not only a nutrition provider or a live feed provider, but we're also a provider of knowledge and help so they can improve their performance. And this is critical in the thinking where you're combining an offering of our product or a solution with learning. You tie your customers much closer to you. And they're expecting that we're coming with the new solutions. They are expecting that we're continuing to do that, which creates new opportunities, strengthen the customer relationships, but also opens up new customer opportunities with new customers. And that's basically how we're thinking around it.
Okay. We have a question from the online audience about health and biological challenges, which seems to be a big topic in Norway, Iceland as well as in Chile. What concrete effect can you see from this on your Health business as we speak?
Well, what we saw in December was that we had scheduled treatments and I was standing here in November, happy about higher treatment volumes in November and we went into December and then the orders we have for December just disappeared because of that -- the farmers didn't dare to do the treatment because of said PD, BKD, with all the fish health issues. So instead of being able to treat, they needed to do other things, sorting out or whatever. So that is an impact that we have on our business in the practical terms and creates these fluctuations in demand. And if we're sitting with a heavy infrastructure, that exposes us to that. That's why we're taking the actions. So that's one dimension. The second dimension is that the fish health issues that the industry is facing needs to be resolved. It needs to be resolved. The industry -- and the industry is on that. So that creates an opportunity within our Health business area for business also. We know that Ectosan Vet and CleanTreat is the most environmental, they're also the most gentle and efficacious medicines that you can use, Salmosan also. And we've seen a development over years, especially in Norway, where mechanical treatments have become a very important part of the way that they treat sea lice. We see that the industry most likely need or they need to move towards more gentle treatment methods using medicines. And that's an opportunity for us going forward. So we have this fall out. We have this immediate effect that we're battling with, and then we have this long-term perspective that gives us an opportunity.
There is a question with regards to Advanced Nutrition, which, of course, you commented on in the presentation as well, but there is one question here regarding the strong performance in Europe for marine fish, which seems to be offset by the softer shrimp markets. What can you -- can you say -- can you elaborate on the split on these 2 and how you see those 2 sort of develop from here?
You can give the numbers on the split, Septima because you have probably the exact number on that. But I can comment more on -- none of these markets has been easy over the last year, and none of these markets has been easy either in Q1. But I would say that shrimp is the biggest portion, and it has been the most challenging for us. We have performed very well, as I said, in marine fish in Europe despite the market. And I think also we -- given the market conditions, we've been performing well also in a strong -- when it comes to the shrimp markets. Going forward, it seems to be an easening of the situation. That's my reading of the situation or reading of the situation, an easening of the situation on the marine fish markets. If they use that to increase production, we don't know. That will -- and so the short-term effect of that, we're still unsure of. But they're in a better state now than if you go back into -- back to last year. So that poses an opportunity for us. As I said, our focus is, and this is a saying, we just -- market is what can we do in order to optimize our performance. And that's really been the main message and the main mantra in the way that we've been operating our Advanced Nutrition business.
From that split, marine fish generally is on an annualized basis, sort of between 24% and 25% over the last 3 years. It's been very consistent, but it is slightly more weighted in the first half of the year versus the second half of the year. But the performance this year has been very solid within that market.
There is one final question from the online audience regarding outlook for the year. And this has given the lower sales and EBITDA performance in the first quarter. What should we expect in Q2 and for the rest of the year on these 2 KPIs?
I'll take that one.
Yes, you can take that one.
So from a quarter 1 point of view, quarter 1 is done and dusted. But we're expecting to have a very solid performance from a revenue and an adjusted EBITDA perspective for the rest of the year. It will be slightly more weighted towards the second half of the year as we'll have seen sort of previously, apart from the anomalous last year for the first quarter, but we're still trading in line with our expectations, but also we're within consensus. So that's very pleasing from a CFO point of view.
Okay. And that seems to end the Q&A.
Thank you, and thank you for attending.