Shares in Wellard have hit an all-time low after the live cattle exporter flagged a disappointing end-of-year result.
Shares in Wellard have hit an all-time low after the live cattle exporter flagged a disappointing end-of-year result.
Wellard said the full extent of its losses for FY17 would not be known until the end of next month, but it expected losses for the second half of the year to be between $55 million and $65 million, before asset impairments and write-downs.
The extent of those impairments are yet to be disclosed.
The news sent Wellard shares down more than 25 per cent to 14.5 cents at the close of trade.
It is the lowest price that Wellard has traded at since it listed on the ASX in December 2015, at $1.35 a share.
Wellard has been undertaking an operational review, which includes a headcount and overhead reduction.
“There are a series of reasons for these results, including a reduction of demand from South-East Asian markets due to sustained high cattle prices in Australia resulting in extended favourable conditions for growers after the end of the northern Australian wet season, and an extraordinary loss on one voyage in South America,” Wellard said.
The loss on the South American voyage was estimated at up to $10 million.
Wellard said feeder and slaughter cattle exports for the six months to June were 38 per cent lower than the previous corresponding period, while the price of cattle in Australia had remained uneconomically high.
“Live exporters and abattoirs face considerable competition for cattle from growers both holding stock and building their herd,” it said.
“These sustained high prices have meant that the traditional Indonesian and Vietnamese live export markets have been depressed, with buyers reducing the number of cattle purchased and not willing to absorb or pass on the increased costs.”
Managing director Mauro Balzarini said the company was disappointed to be in its current position.
“Our previous expectations of market improvement at this point in the season have not materialised, with conditions remaining extremely difficult,” he said.
“This is evidenced by more than a 60 per cent drop in exports to Indonesia in June, compared to the same period last year.
“Our markets continue to defy normal season trends, with previous positive signals being brief and not sustaining.”
Mr Balzarini said Wellard remained focused on improving its operational flexibility so that it would be ready for when markets improved.
“Our stronger balance sheet with higher cash and lower debt, plus a lower fixed cost base will help us to sustain this market downturn and will allow us to return to profitability once conditions improve,” he said.
Wellard will release its FY17 results late next month.
