An amount of $17.3m, being the net proceeds from the sale of the $34.9m MV Ocean Outback, was received subsequent to the financial year end.
Live exporter Wellard has finished the year ending June 30 with a net loss after tax of $77.3 million and revenue of $497.9 million.
The Company’s loss before tax, excluding impairments on vessels, was $61.4m, which is in line with the $55m-$65m range provided by Wellard to the ASX in its announcement dated 18 July 2017.
The anticipated additional non-cash write-down on the sale of the MV Ocean Outback totalled $13.1m as previously disclosed, which formed part of the $19.8m in asset impairments and write-offs set out the preliminary final accounts.
Wellard finished FY2017 with an improved net cash position of $33.0m, largely due to the capital raise completed by the Company in May 2017.
An amount of $17.3m, being the net proceeds from the sale of the $34.9m MV Ocean Outback, was received subsequent to the financial year end.
Key elements of the FY17 results relative to the FY16 results are as follows:
Gross profit 27.7 88.9 EBITDA (42.2) 2.1 NPAT (77.3) (23.3) Net assets 129.3 188.8 Net cash 33.0 31.9
Wellard CEO and Managing Director, Mauro Balzarini, said he and the Wellard management team were extremely disappointed by the financial results –
“Management and staff continued to work hard to manage the impact of historically high Australian cattle prices, which are impacting the Company’s volumes and margins, and therefore financial results,” Mr Balzarini said.
“The number of cattle we shipped for the financial year fell by 29 per cent. In addition, the high purchase price of cattle in Australia combined with price resistance in South East Asian markets reduced our margins.
“Persistently high Australian cattle prices have allowed frozen Indian buffalo meat to obtain a foothold in the Indonesian market, which is likely to have an ongoing impact on demand for Australian cattle. Whilst a segment of the Indonesian market continues to prefer Australian cattle there is a risk that volumes will not return to historical highs. High prices have similarly impacted demand from Vietnam.
“The lower demand for livestock from South East Asian markets during the period also resulted in excess shipping capacity, which forced freight rates lower, thereby reducing our shipping margins.”
These market conditions led the Company to accelerate expansion in the South America market. Whilst utilising excess shipping capacity, dealing with new suppliers and less familiar customers produced variable results. The Company is re-shaping its operations in this region to address these challenges.
It has also been actively managing its costs, its fleet utilisation and its cashflow.
“In response to market conditions we have commenced a cost out program, limited capital expenditure, reduced our head count, reinvigorated our sales effort and reviewed the size of our shipping fleet,” Mr Balzarini said.
“We sold the MV Ocean Outback in July 2017 and deferred the delivery date of the MV Ocean Kelpie until 30 November 2019, including the majority of related financial commitments, which have been pushed back by 12 months. These initiatives will improve the utilisation of the Company’s remaining shipping assets and have improved our balance sheet with extra cash from the sale. We have also contracted out ships for external charters when this was more profitable than exporting and shipping.”
Net debt was reduced by approximately $8.1m as at 30 June 2017 and was further reduced by $15.6m post-balance date due to the retirement of debt owed on the MV Ocean Outback.
Wellard finished the 2017 financial year with net assets of $129.3m (FY16: $188.8m). This consisted of total assets of $359.0m (FY16: $474.7m) and total liabilities of $229.7m (FY16: $286m).