Chinese buy into live shipper Wellard

19 Sep, 2016 10:01 AM
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China's Fulida Group investment in Wellard demonstrates its consistent interest in the live cattle export trade, particularly opportunities in selling Australian cattle to Chinese markets, says Wellard chief executive officer, Mauro Balzarini.
China's Fulida Group investment in Wellard demonstrates its consistent interest in the live cattle export trade, particularly opportunities in selling Australian cattle to Chinese markets, says Wellard chief executive officer, Mauro Balzarini.

A Chinese partner with Perth-based livestock exporter, Wellard, is to become a 16.58 per cent shareholder in the troubled business after a deal with the company’s founder Mauro Balzarini.

Mr Balzarini’s private company, WGH Holdings, is transferring 66.32m of its shares to Fulida Group Holdings in an agreement which allows WGH to repay a $15.8 “separation payment” it owes Wellard by the end of this month, plus $500,000 in interest.

Fulida is primarily a textile business based in Hangzhou in China’s most eastern province, Zhejiang, but it began developing a joint venture livestock import, lotfeeding and processing business with Wellard last year as part of the shipping company’s moves to open up the live trade to the region.

WGH, which has owned more than a third of Australia’s biggest live export company, will remain Wellard’s largest shareholder with about 80 million shares, or a 20pc stake.

The deal also wipes a $33.3m debt WGH ows Fulida.

Mr Balzarini, also Wellard’s chief executive officer, recently sold his Perth home and his WGH company’s farming interests are also on the market for a reported $100m in line with his plans to move his business base to Singapore.

Wellard, which floated on the Australian Securities Exchange (ASX) last December, has been hit by a series of cuts to its profit forecasts after livestock ship breakdowns early this year.

The soaring cost of sourcing Australian cattle for the livestock trade has also savaged profit margins.

Wellard booked a disappointing pro-forma profit of $14.8m after tax three weeks ago - well under its pre-float prospectus forecast of $46.4m for the year.

Other listed livestock exporters Elders and Ruralco have reported similar tough times in the livestock trade because of the collapsin profitability of beef cattle exports from Australia.

Elders last week halted its livestock exports to China and Russia and plans to sell its live export businesses after its trading year ends in September.

However, Mr Balzarini said the transaction with Fulida showed the support Wellard enjoyed from long term investors continued to “remain strong”.

“We welcome Fulida, which has shown a consistent interest in our industry over a long period, as a significant Wellard shareholder,” he said.

He said the deal would give the Chinese company exposure to the full international beef supply chain into China and other countries.

A year ago Wellard and Fulida became equal partners in the Wellao joint venture which will be marketing Australian beef into China.

The venture also intends to construct a series of feedlots and an abattoir in China to fatten and process Australian cattle and market the beef from those cattle.

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media

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$2.5 million over four years will only be soaked up by wages, redtape and protocols.
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And as per report of 2016, India stood at no. top in beef export with export value of 3680
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The customer is always right? And the customer (particularly for WA) doesnt want GM product, If