WA wool merchant in livestock move
WA-owned wool merchant Westcoast Wools will try its hand in the livestock game when it acquires the livestock division from debt-laden agribusiness FarmWorks Australia next month.
Westcoast Wools director Brad Faithfull said the new livestock services would further strengthen the company’s wool business.
“We have received numerous requests from clients to provide livestock marketing services and the opportunity to purchase FarmWorks enables us to take these services and support to the farm gate, ” he said.
“Apart from our already extensive network, we will be adding to the number of staff on the ground to cover all areas of wool, livestock and grain.”
Westcoast Wools has also added grain buying to its offerings, acting as an agent for Glencore Grain.
FarmWorks and Westcoast Wools have signed a heads of agreement for the acquisition of livestock services, effective from July 1. Neither party would disclose the sale price.
The sale of the livestock division keeps a partial dream of FarmWorks founder Kevin Gammage alive.
The former company director set up FarmWorks in 2001 as one of the few WA-owned and based agriservice providers, but pressure to raise capital saw it list on the ASX in March 2010.
FarmWorks wound-up its property division earlier this year and at its February annual general meeting announced it had its sights set on bankrolling an ambitious national expansion program.
Company chief executive Rick Moody said the new focus would be on the growth of the rural merchandise sector in Australia, which would be “real and meaningful” to the future of FarmWorks.
Although the company’s share price has plummeted to half its value since March, Mr Moody said market conditions were right to focus on core profit drivers.
“WA has had a very poor season and there has been little turnover, especially in rural property, ” he said.
At the time of announcing the plan to sell-off the livestock and property divisions, stockbroker Cameron Bartram, of Sentinel Stockbroking, said FarmWorks would face stiff competition from Landmark, owned by Canadian agribusiness retailer and fertiliser giant Agrium.
However, Mr Moody said last week that FarmWorks would be better served if it did not try to emulate the bigger players and worked to keep costs to a minimum.
“As a smaller company, FarmWorks will be competitive against the other major agrichemical companies, ” he said.
Mr Bartram said after analysing FarmWorks’ 12-month accounts ending March 31, 2011, it was his opinion that the sale of the company’s livestock sector was a necessity.
The accounts revealed the company made a loss of $2.1 million last year and had a turnover of $120.3 million, with assets of $50.9 million and liabilities of $47 million.
“They (FarmWorks directors) have identified a strategy to turn the business around, ” Mr Bartram said.
“It is the first step to return the company to profit.”
Since becoming FarmWorks’ chief executive in January 2011, Mr Moody has worked to get the capital base right for the company.
He said it was a key priority to position the company in Australia’s high-growth agrichemical sector.
Get the latest news from thewest.com.au in your inbox.
Sign up for our emails