Live exporter Wellard posts $24 million loss for 2022-23 financial year

A drop in Australian cattle exports and soaring fuel prices have ended three consecutive profitable years for Wellard, with the live exporter reporting a $24 million loss last financial year. Wellard this week reported its first full year loss in four years for 2022-23, after posting an after tax net profit of $15.3m in 2021-22. In a statement to the ASX, the company attributed the loss to multiple factors including a poor macro-trading environment marked by depressed live cattle exports from Australia, which reduced charter rates and vessel utilisation. Wellard also spent $5.2m on engine repairs to one of its three livestock carriers, the M/V Ocean Swagman, with the works leaving the vessel idle for 87 days. While the company has submitted claims to its insurer, payment will not be received until sometime this financial year. Other pressures included increased fuel and operating expenses, which rose by $2.8m year-on-year on the back of global inflation; and relocation costs for Wellard’s other two vessels to South America to access the reopened Turkiye market. Wellard executive chair John Klepec said smaller consignments to Indonesia had exacerbated the “disappointing” result, with 10 shipments from Darwin averaging just 1488 head of cattle. “That average sized consignment would take up less than one deck on Wellard’s M/V Ocean Drover, with another eight decks to spare,” he said. “Alternatively, all the cattle on those 10 voyages would have fitted on a single M/V Ocean Drover voyage, with room to spare.” Wellard’s balance sheet remained strong, with $11.5m in cash and cash equivalents contributing to negative net debt of $7.5m as of June 30. And a lean cost structure should allow the company to weather the impact of poor trading conditions globally and to capitalise on an improving trading environment, according to Wellard. Mr Klepec said Wellard started 2023-24 with a more promising charter book and growth outlook than in the last two financial years. This was largely attributed to falling fuel prices and heightened activity in the South America to Turkiye live cattle trade. “However, we are waiting for further demand to crystalise into quarter two to add greater certainty to our forward order book of charters,” Mr Klepec said. Wellard’s vessels are expected to be fully booked for the first quarter of the financial year, as the declining price of Australian cattle boosts exports to Vietnam. Mr Klepec said producers would have to release more cattle at current or lower prices to increase exports to Indonesia, where Australia has strong competition from frozen Indian buffalo mean and Brazilian beef. Wellard loaded more than 142,000 head of cattle last financial year with a 99.95 per cent delivery success rate.