Wood exporter Midway says delays will chip away at its profits, but don’t pulp it just yet
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Australia’s largest wood fibre exporter is preparing investors for a bad first half, after two shipments were delayed in December.
Midway (ASX:MWY) says first half profit will be lower than that of the same period last year, which was $6.5 million.
The first half profit last year itself was down 56.4 per cent on the back of no revenue from log sales, higher stumpage costs following the sale of the tree crop, and high foreign exchange costs.
A company spokesman told Stockhead the audited results are not yet finished so they don’t know exactly how deep the dip will be.
He said the shipments from Geelong were going to China and delayed after a customer changed their production schedule which pushed out their own requirements for deliveries. Shipping availability was also tight over Christmas.
Midway says second half trading conditions tend to be better than the first anyway.
Indeed, in fiscal 2017 second half profit hit $8.3 million, although the full year figure was still down 43.2 per cent on the year before.
“A slight disruption to our shipping schedule has delayed two export shipments planned for late in the first half, while loading commenced in late December a sale cannot be finalised until the vessel is fully loaded which will be early in the second half of the financial year,” chief Tony Price said.
“We have good wood fibre stock levels, so the delayed timing of export shipments to meet customer production requirements will favourably affect export volumes in the second half of the financial year.”
He says they’ve also signed export contracts with better pricing terms than last year.
Midway closed Wednesday down 305 per cent at $2.48, giving it a market value of $192 million. This was still near the top of its 52-week trading range or $2-$2.65.