Wellard loses $2.1m as its live export focus restructures

However, the company insists its earnings position and prospects are improving, with net debt cut 24.5 per cent to $84.5m - down from $112m last June.

It is also upbeat about the earnings outlook for the current quarter, with all its available shipping space chartered,

That's a big improvement on the poor tonnage utilisation rates at the same time in the past two years.

That said, recent welcome drought-denting rain in Northern Australia would drive renewed restocker demand for cattle, making stock more expensive for export customers, putting live exporters' margins under pressure and potentially reducing inquiry for shipping space.

For the six months to December 31, with the company mid-way through restructuring operations to focus on chartering, revenue actually slumped to 49.1m, against $188.2m in the first half of 2018-19.

Chartering activity grew from 18pc of total revenue to 93.2pc, while livestock trading represented just 7pc, down from activity declined from 81.9pc a year earlier.

However, Wellard's gross profit margin increased by 90pc with its transition from being an exporter/trader to charter business.

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Executive chairman, John Klepec, said although earnings before interest, tax, depreciation and amortisation halved to $10.8m, the 80.3pc lift in the operating profit margin to 22pc indicated a significantly greater portion of revenue was now translating into operating income.

Operational expenses had declined to $4.1m from $10.4m and administration costs fell to $3.4m from $3.9m, largely due to savings on labour expenses.

He said the EBITDA result was a significant improvement on the negative report from the end of last financial year due to improved utilisation of its largest vessels.

However, the Ocean Shearer did not complete a voyage in July or August, which weighed on the company's results.

"Importantly, the back to back chartering of all of Wellard's vessels throughout Q2 looks likely to continue in Q3, albeit with the MV Ocean Swagman undertaking its periodical dry dock for about six weeks," Mr Kepec said.

"The $US53m sale of the MV Ocean Shearer, scheduled to close before the end of March 2020, will complete our balance sheet restructure."

Combined with the earlier sale of the MV Ocean Swagman, Wellard's monthly interest payments were shrinking from $US500,000 in July 2019 to an expected $US100,000 after April 2020.

That would translate into a much-improved earnings to profit ratio next half.

As part of Wellard's assault on debt $16m in notes were redeemed in cash during the past six months and a further $6.5m will be repaid to the noteholders in the next two months.

Mr Klepec said the outlook for Wellard's chartering business was not easy to predict after March following recent in the Top End.

While the break would assist in the long term with greater numbers of cattle being bred and eventually sold, any near term increases in the cattle market would place considerable pressure on exporter margins and their ability to win new orders to Indonesia and Vietnam.

The key South America to Turkey trade was also uncertain.

"If Turkey starts to release more import permits as expected in the quarter, the MV Ocean Drover could be deployed to that trade," he said.

"Chinese demand for dairy and breeding cattle remains strong and we will continue to charter our vessels to service that market."

The Coronavirus scare had not impacted bookings of Wellard vessels to date.

The company had several customers who regularly booked Wellard ships who continued to deliver Australian breeding cattle to various Chinese ports.

"The situation does however, remain fluid, and Wellard is unable to predict the full impact, if any, on its business, or the business of its charter customers."