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Tough conditions hurt Aust cattle exporter

AAP logoAAP 29/11/2016 Ethan James

Australia's largest cattle exporter, Wellard, expects tough trading conditions to continue for the first half of next year amid high cattle prices.

Chairman David Griffiths told shareholders at the shipping company's annual general meeting on Tuesday that Wellard is likely to breach some loan covenants in the half-year to December 31 due to pressure on earnings and working capital.

He said the company was working with banks to waive covenant breaches already reported in the first quarter and believed the company would be able to "work through any issues arising from the half-year result".

Mr Griffith hoped the beginning of live exporting to China by the middle of next year would see an improvement in results as more cattle-carrying ships joined the route.

"It has the potential to absorb a significant amount of shipping capacity on longer voyages ... reducing supply and improving trading conditions," he said.

The company predicts normal trading conditions to return in the 2018 financial year.

It didn't stop Wellard's board from incurring a first strike, with 56 per cent of shareholders voting against the company's remuneration report.

Wellard has had a rough debut year on the ASX, with two of its ships breaking down for nine weeks not long after it was publicly listed last December,

Its share price peaked at $1.44 shortly after listing but closed down half a cent at 19.5 cents on Tuesday.

A wetter-than-average 'dry season' helped drive up cattle prices, with many pastoralists focusing on restocking herds rather than selling.

Wellard exported 425,000 cattle last financial year and processed more than 384,000 sheep and goats.

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