Webster profits shrink towards break-even forecast

Despite posting a $2.12 million net profit after tax for the half-year to March 31, Webster has felt the impact of drought, a 17.7 per cent drop in walnut prices and lower than expected yields from its walnut orchards which grow 90pc of Australia's crop.

The half-year profit was down from almost $3.8m for the same period in 2017-18.

Total revenue for the walnut, almond, cotton, grain, beef and sheep meat business was $69m.

Last week Webster announced it had bought the Temora-based Roberts family's Australian Rainforest Honey, including 5500 hives, for $8.2m, to shore up its pollination requirements in the almond flowering season.

ARH owns 1800 hectares and has state forest apiary leases in NSW and Victoria.

It also provides pollination services to almond plantations in southern NSW and northern Victoria in August and September.

Last spring Webster outlayed about $340,000 to hire beekeepers' pollination services for its 260ha three- and four-year-old almond plantings in the Riverina.

The ARH acquisition guaranteed it access to pollinators for its own almond crops, including a further 200ha of immature year-old plantings, at a time when other agribusinesses are also expanding their orchards and need bees.

Managing director, Maurice Felizzi, said honey sales would continue through domestic channels, and Webster had retained existing ARH management and staff to work closely with its horticulture division.

However, drought continued to hurt livestock operations, forcing a "focus on ensuring livestock levels are aligned to available feed stocks and breeding operations are adjusted accordingly".

In February Mr Felizzi told the annual general meeting Webster had 35,700 Dorper sheep and about 3400 cattle, but was gradually destocking its 185,000ha Kalabity Station in South Australia and the 40,800ha Packsaddle Station in Far West NSW to align with available feed.

Stock were moved to feedlots built at its Tandou property near Menindee to help maintain a breeding base and avoid restocking cost pressures when seasonal conditions improved.

Tandou Station was home to Webster's long established lakebed cotton cropping business until it sold 21,901 megalitres of water entitlement to the federal government in 2017, converting the holding to lamb production.

"We are managing through the current dry conditions," Mr Felizzi said, after releasing the half-year results.

"We continue to invest in our core operations to enable future growth in our horticultural and agricultural business focused on southern and western NSW and Tasmania."

Webster, which has about 20,000ha of irrigated western Riverina cropping country, grew 4100ha of cotton in summer which sold for an above average price of $555 a bale.

However, the total crop is well down from 17,000ha picked in 2018 when it was still farming its Menindee and Bengerang assets.

Bengerang's 9600ha included Bourke's Darling Farms aggregation and property near Moree, sold to Australian Food and Fibre for $132m late last year.

At the same time AFF sold its 69m shareholding in Webster to Canada's public service-owned PSP Investments, which now owns almost 20pc of the agribusiness.

Webster, which has 153,000 megalitres of ground water and river flow licences, estimated its entitlement portfolio was currently worth about $360m.

A major capital expenditure program on its Darlington Point and Hay properties would provide 27,000Ml of water storage capacity by June 30.

Mr Felizzi said company would not pay an ordinary interim dividend and was unlikely to pay an end of year dividend, although preference shareholders would receive a nine cent unfranked dividend on June 25.