Wellard dumps dividend amid lower than forecast revenues

Livestock exporter Wellard has issued a warning about its future, as it failed to meet prospectus forecasts.

Wellard CEO Mauro Balzarini at Kelly's holding yards, just outside Townsville.

Battered livestock exporter Wellard has aborted plans to offer investors a dividend after a tumultuous beginning to life on the ASX that involved two significant downgrades from its prospectus forecast.

The group (WLD) also announced the sudden departure of a board member and its group secretary, together with a warning on its ability to operate as a going concern after covenants were breached on June 30.

Wellard has until October 14 to remedy the issue or face a default event.

The developments forced Wellard shares down 10.6 per cent to 29.5c at 1pm (AEST).

For the year to June 30, Wellard logged a pro forma net profit of $14.8 million, in line with the latest guidance issued a fortnight ago for earnings between $14m and $15m.

The result was, however, markedly below the $46.4m expectation detailed in its prospectus ahead of a December debut on the local bourse.

The inclusion of IPO costs pushed it into the red, with a $23.3m loss booked as against a $9m profit forecast in the prospectus.

Wellard, the largest exporter of live cattle from Australia, said its revenues came in at $573.8m, below prospectus guidance for $607.4m.

“A sharp reduction in cattle supply in Australia, combined with resultant record high cattle prices, significantly impacted the company’s trading margins,” managing director Mauro Balzarini said.

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

The board refused to deliver a payout to investors, against prospectus expectations for the first dividend to be declared at the full year results.

The decision was made due to “continued margin compression” and the “significant variance” in earnings from earlier projections.

Mr Balzarini said market conditions remained weak, putting pressure on the group in the near-term.

“We are now focused managing the business through the current challenging livestock market landscape so that we are positioned to take advantage of the opportunities that will present themselves to Wellard when livestock prices invariably return to their normal trading range,” he said.

The results coincided with a shake-up of its leadership team, with director Sharon Warburton quitting the board and general counsel and company secretary Yasmin Broughton tendering her resignation.

Wellard said it had begun the search for suitable replacements.