Despite challenging conditions for the Australian livestock export trade in the second half of last year, publicly listed livestock shipping business Wellard Limited registered a small net profit for the period.

In its first half FY2024 results released to the ASX on Friday, Wellard Limited posted a Net Profit After Tax (NPAT) of US$0.6 million, an 111 percent improvement on the US$5.0m Net Loss After Tax (NLAT) in reported in the first half of FY2023.

Among the factors that had a “positive and significant impact” on the company’s reported earnings was a payment of a US$3.6 million hull and machinery insurance claim, resulting from the February 2023 starboard engine breakdown of the M/V Ocean Swagman, received in December 2023.

The net profit result was achieved despite a 21 percent reduction in revenue.

Two of Wellard’s three ships spent varying periods at anchor during the second quarter of FY2024, due to subdued live export markets during the period.

A decline in Australian cattle prices from AUD 470c/kg to less than AUD 300c/kg did not stimulate greater demand from Indonesian importers until close to the key Labaran shipping period at the end of the year.

Similarly, charter demand from Chinese importers for dairy cattle was non-existent in mid-CY2023, Wellard said, prompting a decision to relocate both the M/V Ocean Drover and M/V Ocean Swagman to the South America to Middle East route.

Wellard also noted that after Türkiye quotas were filled in early Q2 FY2024, demand for the M/V Ocean Drover and M/V Ocean Swagman dried up, and both vessels spent time at anchor.

Contributing to the positive financial result was a decrease in costs, with the company benefitting from a global reduction in Very Low Sulphur Fuel Oil (VLSFO) prices.

Wellard said its cash and cash equivalents exceeded the Company’s entire debt balance, meaning it has again recorded negative net debt, this time of US$4.1 million at 31 December 2023.

Earnings Before Interest Tax Debt and Amortisation (EBITDA) also improved year-on-year, rising US$2.5 million from US$0.7 million in H1 FY2023 to US$3.2 million in H1 FY2024.

The Company said its balance sheet remains in a strong position with US$6.5 million in cash and cash equivalents contributing to negative net debt of US$4.1 million as of 31 December 2023.

As at 31 December 2023 Wellard had net tangible assets of US$37.7 million comprising net cash of US$4.8 million and vessels of US$31.5 million. With 531.3 million shares on issue, this equates to net tangible assets of US 7.1 cents per share (10.7 cents per share in AUD).

Wellard said a success rate of 99.83% was achieved, with the company’s ships delivering 84,498 animals in the reporting period, a 25.6 percent increase on the 67,260 cattle discharged in the prior corresponding period.

The company’s announcement also revealed that Wellard has not negotiated a new time-based charter of the M/V Ocean Swagman with its owner, Heytesbury Singapore Pte Limited and the vessel will be redelivered on or before the time-charter expiry on February 29, 2024.

“Whilst being an excellent vessel, the Ocean Swagman has not been working commercially having had only one charter since November 2023 and Wellard was unable to secure sufficient charters at a rate to enable a positive financial contribution.”

The statement said the M/V Ocean Drover has just completed an Australia to North Asia voyage and is currently en route to South America where it has been fully chartered for back-to-back voyages for the remainder of the financial year and into FY2025.

The M/V Ocean Ute will load a shipment for Indonesia at the end of February after being at anchor awaiting te permits being released.