Wellard shares on horns of dilemma
WELLARD shares have hit an all- time low after Australia’s biggest cattle exporter said it expected an annual loss as high prices for local cattle weigh on demand from Asia.
Wellard said yesterday that cattle prices in Australia remained “uneconomically high” as graziers hold stock and grow their herds. The high prices have reduced demand from live export markets in South- East Asia.
“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,” Wellard said yesterday.
Wellard said its previous expectations of market improvement at this point in the season had not materialised, with conditions remaining extremely difficult. “Our markets continue to defy normal seasonal trends, with previous positive signals being brief and not sustaining,” Wellard managing director Mauro Balzarini said.
Wellard said exports of feeder and slaughter cattle across the industry were significantly lower.
Wellard expects that its trading loss in the second half of the financial year will be significantly larger than its $ 16 million firsthalf loss. The total loss for the full financial year will also be affected by asset impairments and writedowns, and will not be fully known until late August 2017. Wellard shares dropped to an alltime low of 14.5c on the news before recovering slightly to 15.5c.
That’s still down 4c, or 20.51 per cent.
Wellard said it was continuing to review operations and costs and had cut staff and overheads in its domestic and overseas operations.
The company has improved its trading terms with suppliers and is chartering vessels to third parties to help cover vessel costs and long periods of under- utilisation.
Wellard has completed the sale of its ship, the MV Ocean Outback, which will return about $ 17.6 million to the company, and retire about $ 15.6 million in debt.
Wellard said there had been ongoing breaches of its banking facilities at June 30, 2017, but the company was working with its bankers on the provision of waivers.