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Wellard widens loss on weak Asian demand

Simone Ziaziaris  |  31 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Cattle exporter Wellard (ASX: WLD) has deepened its full-year loss more than threefold with record high prices for livestock in Australia hitting demand from Asia.

Wellard, which first listed on the ASX in December 2015, said it made a $77 million loss in 2016/17, compared to a $23.3 million loss the previous year when it missed its $9 million net profit prospectus forecast.

Revenue for the 2016/17 financial year fell 13 per cent to $498 million, due to reduced orders from customers in Indonesia and Vietnam, increased competition from cheaper frozen meat and lower-than-expected volumes from developing markets.

Chief executive Mauro Balzarini said the rise in prices had allowed frozen Indian buffalo meat to get a foothold in the Indonesia market and that would likely have an ongoing impact on demand for Australian cattle.

"Whilst a segment of the Indonesian market continues to prefer Australian cattle, there is a risk that volumes will not return to historical highs," Mr Balzarini said in a statement on Thursday.

He said the reduced demand for livestock from South East Asian markets also resulted in excess shipping capacity, which forced freight rates lower, thereby reducing shipping margins.

Wellard said it is re-shaping its operations to deal with the challenging market conditions, by selling its MV Ocean Outback vessel in July to improve utilisation of the company's remaining shipping assets and expanding its business into the south American market.

"But until we see if price reductions are sustained through the upcoming wet season and into 2018, it remains unclear what impact that will have on Wellard's overall FY2018 results," Mr Balzarini said.

WEAK ASIA DEMAND DEEPENS LOSS

* Net loss of 77m vs $23.3m loss

* Revenue of $498m vs 574m

* No final dividend, unchanged

 

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