04/11/2010 - 00:00

Business builder to develop rural assets

04/11/2010 - 00:00

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JULIAN Walter might be best known in Western Australia for his building empire but his latest commercial initiative is the agriculture sector, where he wants to build a paddock-to-plate empire under the Cherylton brand.

Business builder to develop rural assets

JULIAN Walter might be best known in Western Australia for his building empire but his latest commercial initiative is the agriculture sector, where he wants to build a paddock-to-plate empire under the Cherylton brand.

Responding to questions from WA Business News about his residential construction company JWH Group’s annual result, Mr Walter revealed that the global financial crisis had altered his thinking about where to invest the profits from the business.

A report from accounting firm KPMG had highlighted the resilience of high-quality agricultural land, prompting Mr Walter to shift his emphasis to that sector, in which his family already has substantial land holdings.

“That has ramped up much more since the GFC,” Mr Walter said.

The agricultural holdings are spread across two key geographical areas in the South West – Brookhampton and Kojonup – and consist of nearly 10,000 hectares. Brookhampton is home to stud cattle breeding, which is currently concentrated on the embryo market for Angus cattle, orchards and marron.

Konjonup has sheep and broadacre cropping.

Mr Walter wants to build an agricultural brand like Harvey Beef and suggests the group is less than two years away from taking that brand to the public, if everything goes to plan.

“The emphasis is more on the high value-added side,” he said.

While a branded agricultural producer might seem light years from the building game, Mr Walter said his background was in the commercial world.

He already runs JWH Group, which encompasses Plunkett Homes, Rural Building Company, WA Country Builders, and Oswald Homes, as a series of distinct business units.

He described the building business as relatively subdued but still immensely profitable, and spinning-off enough cash to invest in new pursuits. Mr Walter said he had substantially reduced his exposure to equities and was relatively passive in commercial land investment since turning his post-GFC focus onto agriculture.

However, he said the agricultural business was nearly a standalone investment and was not being significantly propped up by the building company.

The latest annual accounts obtained from ASIC show JWH Group made a $17.6 million net profit for the year ending June 30, up from $13.9 million the previous corresponding period. While there was a substantial profit lift this year, it has yet to reach pre-GFC levels when net profit was more than $20 million.

JWH paid out $8 million in dividends.

Sales, at $360.1 million, were down slightly from $366 million the year before.

According to Housing Industry Association figures, JWH was the sixth most active residential building company in Australia last financial year with 1,651 starts. Perth-based rival BGC headed the national market with 4,392 starts while another local company, Alcock/Brown Neaves Group, came second with 3,526.

Mr Walter said his business was less focused on the first homeowner market than the two giants of the WA industry, preferring to seek an achievable portion of each market segment it enters in order to smooth out some of the ups and downs that accompany the housing sector.

“We are scattered across a lot of smaller target markets,” he said.

“They are not high volume areas which can be volatile.”

Overall, he said, the market remained subdued with little obvious reduction in red tape despite an emphasis by the state government to improve the approvals process.

Mr Walter said the industry was fighting proposed new environmental regulatory standards that were inappropriate to the WA sector.

 

 

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