Improved vessel utilisation and a successful costs out program has enabled Wellard to book a positive operating EBITDA of $8.9 million for the first half of FY18 (1HFY18), a $14.2 million turnaround on the negative $5.3 million operating EBITDA1 in the prior corresponding period.The Company recorded a net loss after tax of $7.5 million for 1HFY18, a $10.4 million improvement on the $17.9 million loss for the prior corresponding period. EBITDA2 was $8.0 million.
Revenue was down by 41.9% to $163.7 million, reflecting the higher mix of ship charters in 1HFY18 compared to the prior corresponding period.
“Wellard’s financial performance has improved during the first half of financial year 18 but there are still challenges ahead” said Wellard Executive Director Operations, Fred Troncone.
“We improved our gross margin by 167.2% to 15.5% and reduced our operational expenses by 31.3%, which improved our operating cashflow and helped to reduce our debt. However, there is still more work to do.
“The biggest change to our operations in the past six months came as a result of the Company taking advantage of chartering opportunities for our large, modern vessels onto the South America to Mediterranean route while using small vessels to retain
1 Operating EBITDA equals EBITDA less non-recurring expenses. Non-recurring expenses during 1HF18 were $0.9 million (1HFY17: $3.6 million).
2 EBITDA equals loss from continuing operations before income tax less depreciation and amortisation expenses less net finance costs less other gains (losses).Wellard Limited – ABN 53 607 708 190
1A Pakenham Street, Fremantle WA 6160 – Telephone (08) 9432 2800 – Facsimile (08) 9432 2880 Email: reception@wellard.com.au – Website: www.wellard.com.au
longstanding customers in a very competitive, low margin South East Asian market, with a resultant decrease in market share in the second quarter.
“Our costs out program delivered savings of $7.9 million in the first half of the year and we are expecting to exceed our full year target of $10 million in annual overhead savings.
“It was pleasing that a higher proportion of voyages in the first half delivered a positive margin. The key now is getting our overall costs right, so the positive margin voyages translate into cash generation for the business and make our vessels more competitive in the external charter market.
“When the time is right we also need to return to higher margin trading contracts, which deliver a trading margin as well as transport margin.”
During the first six months of FY18 Wellard completed its first shipment of beef steers for processing to China. The shipment of approximately 2,000 cattle performed well and was positively received by the customer.
Wellard also shipped a second consignment of dairy heifers, from Portland, Victoria, to Sri Lanka, as part of the Company’s long-term contract with the Sri Lankan Government’s Ministry of Rural Economy.
In total, Wellard vessels performed 20 voyages in the first six months of FY18.
The number of cattle exported by the company fell by 46% as both of the Company’s larger vessels were chartered out to third parties for long haul voyages outside of Australia. Also, and in line with the Company’s strategic decision to match shipping capacity to market demands, the size of the Wellard fleet was reduced by the sale of the M/V Ocean Outback in July 2017.
-Wellard