Freedom Foods Group Limited

FNP Details

Q2FY21 Financial Update: Freedom Foods Group Limited (ASX: FNP) is a consumer-branded food and beverage group. As per a recent update, the company has announced its Q2FY21 results. The total revenue for the quarter was at $158.5 million, which was in-line with the prior quarter. The Dairy and Nutritionals revenue stood at $106.3 million, an increase of $6.8 million on the previous quarter. There was a decrease in the plant-based revenue by 13.4% to $5.4 million, when compared from the prior quarter. During the period, there was positive net cash from operations at $1.8 million. The cash position of the company as on December 2020 stood at $24.3 million. The capital expense of $2.4 million during the period reflected the investment in ongoing projects.

H1FY21 Performance Update: The company reported an increase of ~15% in the revenue from continuing operations to $291.4 million in H1FY21, compared to the previous corresponding period. It delivered adjusted EBITDA from continuing operations at $21.7 million, compared to a loss of $26.5 million on the pcp. The Dairy & Nutritionals revenue grew by ~15% to $209.8 million, and the plant-based beverages revenue was up by 17% to $75.2 million during the same period under consideration. The export revenue, which formed ~21% of the total sales during H1FY21, increased by 36% to $65.5 million. FNP reported a net debt of $326.9 million as on 31 December 2020. The Group reported a statutory net loss after tax of $23.9 million in H1FY21, which is an improvement when compared to a loss of $63.5 million during the previous corresponding period. Despite the impact of COVID-19 pandemic on international trade, overall export sales to the Southeast Asian markets grew by ~33% to $22.2 million during the period. This reflects the growing acceptance of the company’s products among the consumers.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company believes that its financial and operational turnaround strategy has begun to gain traction. Despite the COVID-19 induced volatility FNP’s key brands – MILKLAB and PUREnFERRIN lactoferrin, continues to deliver decent growth. It will look to further increase its sales with penetration of MILKLAB in the out-of-home market, growth of Vital Strength and making key inroads in the Asian export markets.

Stock Details: On 25 June 2020, the company's securities have been suspended from official quotation at the request of the company itself. This is in regard to a pending announcement for the outcome of further investigation with respect to FNP’s financial position. The securities of the company are expected to remain suspended, till FNP provides an update on the anticipated recapitalisation plans by mid of March 2021, which is subject to shareholders approval. The company has cast a doubt on continuing its operations and is of the opinion that it may not be able to survive as a going concern unless it gets more capital. However, it has prepared its H1FY21 accounts on a going concern basis, depending on its ability to continue operations with the expected recapitalisation plans from its majority shareholder.  As per a recent update, the company has advised that a second Victorian Supreme Court class action proceeding was commenced against the company and its auditor, Deloitte Touche Tohmatsu on 22 February 2021. It alleges breach of the Corporations Act 2001, Australian Securities and Investments Commission Act. The 52-week low and high range of the stock stands at $2.750-$5.68, respectively. The last traded price of the stock was $3.010.

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