Wellard avoids second strike to post $3.4m in earnings
Embattled livestock exporter Wellard’s earnings are back in the black for the first four months of the financial year, but shareholders have been warned the company would incur a first-half loss.
Wellard chairman David Griffiths said there was unaudited EBITDA of $3.4 million over the four months to October 31, compared with a $4.2 million loss a year earlier.
Mr Griffiths said 78 per cent of the turnaround had come from cost savings.
“Progress with the restructuring and costs-out program is continuing,” Mr Griffiths told Wellard’s annual meeting this morning.
“We estimate to have reduced overheads at an annualised rate of greater than $10 million — or about 27 per year on financial year 2017 — with further efficiencies and savings expected.”
Cost savings were achieved by cutting staff numbers and external consulting fees.
Mr Griffiths said a first-half loss was expected, and the company continued to require waivers from its financiers.
But he said the board was cautiously optimistic about the medium term.
“While a return to profit is still very dependent on how market conditions play out over the medium term, the board is confident Wellard is on a path to improving its capacity to be leaner and better sized to meet the still tough market conditions,” he said.
Wellard’s shares closed down 0.5¢ to 14.5¢.
The company, which copped a first strike last year, received overwhelming support for the fiscal 2017 remuneration report.
Following the first strike the company made a number of changes, including no increases in fees paid to the board or fixed pay to senior management. Only one discretionary short-term incentive was awarded to a senior manager.
Employee and contractor head count across the company was reduced by 13 per cent from 2016 peak levels.
Mr Griffiths said Wellard would continue to focus on creating a balanced and more diversified portfolio of markets for its sales, through spreading sales across the European and Mediterranean, Middle East and Chinese markets.
He said following Wellard’s first shipment of slaughter cattle to China earlier this month, the group was encouraged by a level of inquiry that could lead to further shipments this financial year.
Meanwhile, there was increased demand for the chartering of two large ships into the South America to Turkey run, enabling Wellard to deploy these ships during the northern Australian “wet season” at reasonably attractive rates.
Executive director of operations Fred Troncone said the Australian Government’s scrutiny of shipping standards and questioning the use of some older vessels was a positive for Wellard.
“Wellard has a young fleet of modern, purpose-built vessels, which will provide us with a competitive advantage as we move forward and the quality of other vessels is questioned,” he said.
Wellard founder and chief executive Mauro Balzarini was travelling and did not attend the meeting.
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