New CFO and full year of new ship combined with normalised conditions bolsters expectations
Livestock logistics player Wellard is looking to better times this financial year, with chairman David Griffiths pointing to some silver linings after last year’s dark financial clouds.
The positives came in the listed firm’s annual report, which was accompanied by news of a new chief financial officer, former Consolidated Pastoral Company CFO John Stevenson as its new CFO, taking over from interim CFO Alan Rule
It was the second senior position to see change this month after it announced Michael Silbert as company secretary, replacing Yasmin Broughton.
Griffiths notes that, despite difficulties which saw projections from its listing last year fail to reach targets, “we were still able to record a pro forma net profit after tax of $14.8 million”, while it also shipped a near record number of cattle, at almost 425,000 head, in the face of record high cattle prices due to graziers’ post-drought restocking.
“Wellard expects that the tight supply conditions that exist in the Australian market will persist throughout most of FY 2017 but will ease in the following year as a return to normal weather conditions and the maturing of the herd rebuilding increases the supply of cattle and puts downward pressure on the record prices in Australia,” the company says.
“This should allow Wellard to improve its volumes and margins towards the levels it would normally expect from this trade.”
Much of the ship trouble was due to delays to the new Ocean Shearer, the induction of which into the Wellard fleet boosts shipping capacity by 50 per cent but which completed only one voyage.
It also faced crankshaft breakdowns of the Ocean Outback and the Ocean Swagman, insurance claims for which has been submitted.
“The company is looking forward to the start of construction of a new pre-export quarantine facility at Livingstone, near Darwin, in the 2018 financial year and further productivity enhancements, including a traceability app for export livestock to Vietnam.
It has also bought land at Condah, near Portland in Victoria, to develop another.
“This purpose-built facility will provide a number of advantages to Wellard including improved performance when compared to our older, leased premises,” Griffiths says of the Darwin premises.
“This will include operational efficiencies from improved induction and load-out design; better environmental performance and also revenue from third party consigners who use the facility.”
MD and CEO Mauro Balzarini described the troubles last financial year as a “perfect storm” but predicts better times as cattle prices fall and its entry into new sourcing markets including Central and South America and exports to China come on tap.
Wellard also commenced construction of a sixth custom build livestock carrying vessel, the Ocean Kelpie, which is scheduled for completion in the third quarter of 2018.
Meanwhile, the West Australian reports the Ocean Swagman and the Ocean Outback may be sold, with the newspaper suggesting a value of $80 million for the pair, though a formal sale process is yet to begin.