A lift in cattle trading, high vessel use and cost savings have helped export trader Wellard achieve its first profit since listing on the Australian Securities Exchange in late 2015.
Interim results released Thursday morning show net profit after tax of $2.9 million, up $10.3 million from a $7.4 million loss in the previous corresponding period.
Revenue for the period was up 34 per cent to $188.2 million.
Net operating cash also improved from a cash flow improved from negative $7.7 million to $25.8 million.
That helped Wellard boost its cash on hand from $8.3 million at the beginning of the reporting period to $13.4 million by the end of the first half, while repaying $16.4 million in borrowings in the interim.
Investors welcomed the turnaround, driving Wellard shares up 31 per cent to 5.9¢ by 10.30am.
The strong result excluded the sale of non-core assets — Beaufort River Meats, the feed mill at Wongan Hills, and its pre-export quarantine facility at Baldivis — which will boost earnings and cash flow in the second half after settlement.
Wellard took a $3.5 million impairment to the carrying value of the group.
Executive chairman John Klepec said it was pleasing for staff and shareholders to record a profit for the first time in Wellard’s listed history.
“Excellent vessel utilisation, profitable cattle trading from Australia to South East Asia and continued cost savings were the key drivers for the improved operational and financial results,” he said.
“However, we are under no illusions that there still is considerable work required to reset the balance sheet, as well as to increase and provide greater repeatability of those operating results.”
Among challenges cited by Mr Klepec were the temporary closure of cattle exports from South America to Turkey, and pressure on importer and exporter margins in the trade of Australian cattle to Indonesia and Vietnam.
“Current weather conditions in Australia, including flooding in Queensland, will delay some planned voyages, and it is not clear how much effect this will have on our full-year results,” he said.
Wellard said it exported 95,036 cattle on 12 voyages during the period, a 21,383-head increase on the prior period.
“Increased northern Australian cattle availability and better trading margins were the key drivers of increased trading activity,” Mr Klepec said.
Mr Klepec said the sale of Wellard’s non-core assets was expected to generate about $13 million worth of free cashflow, including working capital realisation).