Wellard Foreign exchange loss

Hey there,

I have started to recently follow this stock but have some hesitations to buy in. My main concern lies not in company’s ability to generate revenue, which it has done well y-o-y, but its ability to keep it costs down. I want to draw attention that company only broke into net profit during FY14 & FY12 and had to raise cash in order to pay its debt as it was hovering over insolvency. I see the main reason why business is not doing so well not in its finance costs, which are normal when you are expanding your business, but in its forex losses. To make things simple I did a small table below with its NPAT and foreign exchange loss for the last 4 years:

	Column 1	Column 2	Column 3	Column 4	Column 5
1	Description	FY15 ’000	FY14 ’000	FY13 ’000	FY12 ’000
2	FOREX gain/loss	-64,117	-15,118	-29,838	-47,361
3	NPAT	-69,848	151	-53,160	841

It is amazing to see what an impact FX has on Wellard’s profitability, which begs a question why is their hedging so poor. Good people of HotCopper who follow this company more closely could you please shed some light on this.

Kind Regards,
Ed