Author Topic: Is Wellard going down the toilet? $53.16 million loss.  (Read 1253 times)

WA Export News

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Is Wellard going down the toilet? $53.16 million loss.
« Reply #1 on: December 12, 2013, 11:57:34 PM »
Wellard seeks advice on possible asset sale   

LIVESTOCK export giant Wellard Group is understood to have hired consultants to assess a partial sale or restructure of the sprawling Fremantle-based conglomerate, after it swung deep into the red this year.

Accounts lodged this month show Wellard Group Holdings -- one of the world's biggest exporters of live sheep and cattle -- posted a $53.16 million loss for the year to June 30, a sharp drop on the $841,302 profit it booked in 2011-12. The result came on the back of shrinking margins and a fall in revenue to $311m in the year, from $416.2m in 2011-12.

The conglomerate has been hurt by closures and increasing competition across its biggest export market for live sheep -- the Middle East -- as well as its biggest cattle market, Indonesia, restricting import quotas.

The Perth-based Balzarini family is the controlling shareholder in Wellard, which was founded by Italian butcher Emilio Balzarini in 1979.

The private equity arm of Standard Chartered bank invested $83m in February 2011 through a convertible note to become the second biggest holder on the register. Just months later, the federal government put a snap ban on live cattle exports to Indonesia over animal welfare concerns.

It is understood the cash squeeze on the business pushed Wellard to hire McKinsey earlier this year to assess a sale of key assets or divisions, and a restructure, although the consultants are not currently advising the company. Wellard's accounts show it had $525.3m in consolidated gross assets as at June 30. Industry players say Wellard is a shipping and trading play, with most of its value held in its Singapore-based fleet, which has three vessels and a fourth under construction.

Wellard has $124.27m in freehold land, at fair value, largely in Western Australia.

Substantial fixed-cost overheads have added to pressure on Wellard's cashflow. Standard Chartered private equity is in a position to inject more cash into the group, but such a move would dilute the Balzarini family holding.

Margins for Wellard's livestock business are understood to have become "razor thin" on the back of lighter volumes and fiercer competition in the Middle East, particularly from North Africa. Live sheep exports fell from 621,400 head of sheep to 466,422 in the year to June 30, while slaughter cattle dropped from 253,401 head of cattle to 99,796.

Wellard began life as a livestock exporter in Fremantle but now spans shipping, land holdings, farm machinery and transport, communications and mixed farming across Australia, New Zealand, Asia, the Middle East and South America.

Wellard's swing to a loss in fiscal 2013 is a far cry from its performance in previous years, with the conglomerate posting profits of $4.3m in 2011 and $10.8m in 2010.

Wellard has cited the high dollar and the controversial Exporter Supply Chain Assurance System -- which was formed in response to the 2011 exposure of cruelty in Indonesian abattoirs and has resulted in the closure of key Middle East markets for its sheep exports -- among its "challenges".

A spokesperson for Wellard said: "With the current interest in Australian agriculture, Wellard continues to receive business proposals from numerous sources. Throughout the past five years Wellard has retained corporate advisers at numerous times to review opportunities, and now is no different."

Any sale would be boosted by a parliamentary vote yesterday against a proposed interim ban on Australia's live animal export trade.