Wellard heads to calmer waters

Improved margins on live cattle voyages have helped agribusiness Wellard reduce its net loss after tax for the first half of the financial year to $7.5 million, nearly 60 per cent lower than the previous corresponding period.

That came as revenue dropped dramatically, down nearly 40 per cent to be $164 million.

The number of cattle exported by Wellard also fell considerably, to be around 46 per cent lower, as part of the business’s fleet was loaned to third parties and a further vessel was sold.

Earnings before interest, tax, depreciation and amortisation of $8 million was much stronger than the previous period, when it had been a loss of $9 million.

One big change for Wellard was the start of live exporting to China in October, with 2,000 head leaving from Victoria to the province of Shandong.

It will be welcome news for investors in Wellard, with the company losing more than 80 per cent of its value since listing thanks to tough conditions in the live export market.

Wellard executive director operations Fred Troncone said the company’s performance improved during the first half of the financial year.

“We improved our gross margin by 167 per cent to 15.5 per cent and reduced our operational expenses by 31.3 per cent, which improved our operating cash flow and helped to reduce our debt,” he said.

“The biggest change to our operations in the past six months came as a result of the company taking advantage of chartering opportunities for our large, modern vessels onto the South America to Mediterranean route while using small vessels to retain longstanding customers in a very competitive, low-margin South-East Asian market, with a resultant decrease in market share in the second quarter.

“Our costs out program delivered savings of $7.9 million in the first half of the year and we are expecting to exceed our full-year target of $10 million in annual overhead savings.

“It was pleasing that a higher proportion of voyages in the first half delivered a positive margin.

“The key now is getting our overall costs right, so the positive margin voyages translate into cash generation for the business and make our vessels more competitive in the external charter market.

“When the time is right we also need to return to higher margin trading contracts, which deliver a trading margin as well as transport margin.”

Shares in Wellard were up 3.5 per cent to 15 cents each at the time of writing.