Major Australian onion and walnut company Webster Ltd has announced it will make a A$20.4m share issue this month in a bid to expand its walnut operations.
The rights issue has been lodged with the Australian Stock Exchange, and is expected to be sent to shareholders on Tuesday (18 September).
Webster operates the Southern Hemisphere’s largest walnut grower-marketer, Walnuts Australia, as well as Australia’s largest onion exporter, Field Fresh Tasmania.
The A$20.4m proceeds of Webster’s share issue will be used in the 2013 financial year to build a new walnut cracking facility, enable a staged 50 per cent growth in the company’s walnut plantings over the next four to five years, retain a ‘conservative balance sheet’, and give the company a war-chest to take advantage of any opportunities that might arise over the next year.
Webster has spent recent years weighing its business more heavily towards its walnut operations, which have been experiencing good returns and show solid promise for the future in the face of rising demand in Asia and the Middle East.
“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,” the company’s chairman Rod Roberts said in a statement.
“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.”
The company is well-placed to take advantage of that growing demand. Walnuts Australia marketed 4,800 tonnes in the 2012 financial year, and expects that figure to grow to 11,000 tonnes by the 2016 financial year. Webster currently manages 2,100ha of walnut orchards – of which it owns 90 per cent – mainly in the Riverina.
Webster has been showing solid financial results in the past 12 months, despite the difficult Australian export environment. Last month the company announced a A$4m after tax profit for the year, and Webster currently has a market value of A$53m. The company’s share price has also risen 47 per cent in the past year, reported the Wall Street Journal.