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Cattle exporter misses prospectus targets

AAP logoAAP 31/08/2016 Trevor Chappell

Live cattle exporter Wellard Group has missed its prospectus forecasts on revenue, profit and margins, booking a $23 million annual loss instead of the forecast $9 million net profit.

Stripping out share based payments, transaction costs and other expenses associated with the company's float on the share market in December 2015, Wellard made a pro-forma net profit of $14.8 million in the year to June 30.

It had forecast a pro-forma net profit of $46 million.

Shares in Wellard plunged, dropping 4.5 cents, or 13.6 per cent, to 28.5 cents, after emerging from a trading halt put in place on August 29.

Managing director Mauro Balzarini said Wellard and its shareholders had endured a tough start to life on the share market.

"A sharp reduction in cattle supply in Australia, combined with resultant record high cattle prices, significantly impacted the company's trading margins," he said.

"When combined with two vessel breakdowns and the delayed delivery of the M/V Ocean Shearer, it weighed heavily on our financial results."

Wellard said its gross margins were below prospectus forecasts mostly because of unprecedented wet weather in northern Australia, and a continued depletion in the Australian herd size.

This had significantly tightened the supply of cattle and pushed prices to record highs which traditional South-East Asian customers were unwilling to accept.

The volume of cattle sold was also below prospectus forecasts, due to a delay in the commissioning of the transport vessel MV Ocean Shearer and mechanical failures on two other vessels.

But the depreciation of the Australian dollar against the US dollar delivered a $3.1 million gain for Wellard.

Mr Balzarini said the company was focused on getting through the current challenges in the livestock market and pursuing opportunities when prices return to their normal trading range.

"That will be helped by entry of the M/V Ocean Shearer to Wellard's fleet which occurred in late FY2016 and the development of our South American operations," he said.

Wellard shipped 424,972 head of slaughter, feeder and breeder cattle to customers in nine countries in 2015/16, and more than 23,000 sheep to three countries.

It also shipped more than 6,600 tonnes of sheep meat to customers in more than 12 countries.

WELLARD MISSES PROSPECTUS FORECASTS

* Annual loss of $23.3m, below prospectus forecast of $9m profit

* Revenue of $573.8m, below prospectus forecast of $607m

* No dividend

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