Debt a cause for concern as costs mire annual results and default isn't ruled out
Livestock logistics and trading firm Wellard’s failure to fulfil its December stock exchange listing promises took annual results headlines.
But it also suffered less-noticed but hefty rises in expenses and one-off costs that could otherwise have bridged the gap to profits of $14.8 million.
Wellard, equipment for which includes shis and trucks, had expected to run a net profit of $9 million but recorded a $23.3 million loss.
Two days after a trading halt, it blamed wet weather in northern Australia, lower sales volumes, currency losses and livestock ferry issues, along with listing costs.
In all, operating expenses rose from $26.8 million to $36.3 million, ‘other expenses’ came in nearly 10-fold higher from $3.4 million to $30.5 million and foreign currency dealings saw a loss of $10.7 million compared with a profit last year of $17.1 million.
Despite it all, revenues still rose 12 percent to $573.8 million.
“A sharp reduction in cattle supply in Australia, combined with resultant record high cattle prices, significantly impacted the company’s trading margins,” managing director Mauro Balzarini says.
“When combined with two vessel breakdowns and the delayed delivery of the M/V Ocean Shearer it weighed heavily on our financial results.
“Importantly, despite these tough trading conditions we still achieved a pro forma NPAT of $14.8 million.
“We are now focussed managing the business through the current challenging livestock market landscape so that we are positioned to take advantage of the opportunities that will present themselves to Wellard when livestock prices invariably return to their normal trading range.
“That will be helped by entry of the M/V Ocean Shearer to Wellard’s fleet which occurred in late FY2016 and the development of our South American operations.”
The company notes it is in breach of its working capital debt facility but says it has a waiver and extension to October 14 before it enters default territory.
With money owing and negotiations in the offing, it hopes to avoid that fate.