Webster’s walnut industry takes off with big growth prediction

Posted by AFN Staff Writers on 13th September 2012

Australia’s main walnut producer, the Tasmanian-based Webster Ltd has recently announced an after-tax profit of $4 million. In announcing the profit result, the Company also announces a capital raising to fund further growth in core areas and to provide a platform for increased earnings in coming years.

The largest component of the Webster business is in the growing, managing, processing and marketing of walnuts. Webster manages 2,100 hectares of walnut orchards, 1,670 hectares of which are based in the Riverina region of NSW. Almost 90% of orchards are company owned. Of the Riverina orchards, grower investors have an interest in the crop from 950 hectares; Webster receives management, harvesting and processing fees, and contracts on an annual basis to market this crop.

Additionally, Webster is Australia’s largest exporter of onions from its facility near Devonport in Tasmania.

The Company said it was pleased to announce a capital raising comprising a 15% placement, of ordinary shares, to a company associated with Mr Chris Corrigan at a price of 50 cents per share(Placement) and a renounceable rights issue (on a 1 for 4 basis), at the same price (Rights Issue). If fully subscribed the capital raisings will total $20.4 million. Mr Corrigan, previously a director, has been invited to re‐join the board.

The record date for the Rights Issue is expected to be 12 September 2012. Full details of the terms and conditions of the Rights Issue will be contained in the offer document which is expected to be lodged with ASX on 3 September 2012 and sent to Shareholders by 18 September 2012.

Broker, CCZ Equities Limited, has been appointed sponsoring broker. Webster anticipates a sound appetite for the Rights Issue and has chosen to not have the issue underwritten. A shortfall facility is part of the Rights Issue, enabling shareholders to apply for additional shares (should they be available), provided that no shareholder becomes entitled to more than 19.9% of the Company.

The funds will be used to:

finance a walnut cracking plant to value add the increasing production coming from Webster’s owned and managed orchards,

enable a 50% expansion of the company’s walnut orchard estate, in a staged manner, over the next 4 to 5 years,

retain a conservative balance sheet, and

position the company to potentially take advantage of opportunities, should they arise, in related areas or where the company has particular expertise.

Webster Chairman Rod Roberts commented that:

Directors are generally pleased with the result in what has been a challenging year. Webster derives a majority of its income in export markets and faces the twin challenges of a relatively high Australian cost base and a high Australian dollar.

With the loss of international shipping services, exporters from Tasmania must from now tranship product through Melbourne. This additional short shipping leg has a similar cost to shipping to East Asian ports.

Assets and walnut projects, acquired last year, have performed to expectation and the company expects to further benefit in coming years from scale economies with both the new walnut cracking line and the foreshadowed, staged, increase in its walnut orchard estate.

Barriers to entry to the walnut industry are high, with propagating varietal types, horticultural practices and processing skills all quite sophisticated. Global demand for walnuts, associated with well documented health benefits, coupled with Australia being a counter seasonal Southern Hemisphere supplier of fresh product, give directors confidence about the future growth and profitability of the walnut business.”


Webster ended the financial year with minimal net debt of approximately $4.5 million, against total assets approaching $99 million. With the announced capital raisings, Webster is positioned to implement strategies to develop its operations and take advantage of opportunities which may arise.