Freedom Foods feels bite as chief executive takes 'leave'

Investors sent ASX-listed food maker Freedom Foods shares plummeting after the company said its chief executive Rory Macleod was on leave a day after the resignation of its chief financial officer.

The company went into a trading halt late on Wednesday pending a further announcement about its financial performance. Before trading was suspended, shares dropped by 14 per cent, or 51¢, to a five-year low of $3.01. The trading volumes were unusually high with 21.5 million shares trading hands, or nearly 8 per cent of the shares on issue.

Freedom Foods chief executive Rory Macleod is on leave from the company.Credit: Peter Braig

Freedom Foods said in a statement that commercial director Brendan Radford had been appointed acting chief executive of the company and chairman Perry Gunner had been appointed executive chairman. The developments came a day after the resignation of the company’s chief financial officer Campbell Nicholas.

The company, which has a market capitalisation of $834 million, makes the cereal brands Arnold's Farm and Heritage Mill. It also makes Australia's Own longlife milk and Australia's Own organic almond milk.

The company's stock price has been under significant pressure in recent months after spiking above $5.50 in March.

Last month in a COVID-19 trading update it said sales in its out-of-home channel were significantly below forecasts as distributors de-stocked and food outlets were closed due to the lockdowns. It warned that its second-half profitability would be materially impacted.

The company's biggest shareholder is the Perich family, which has recently been buying Freedom Food shares on market, adding about 1.5 million shares to their investment vehicle Arrovest since early March. Arrovest now holds 145,556,000 shares, or 52.5 per cent of the company.

In January Freedom Foods was hit with legal action in California after a key supplier alleged the company withheld payments for a well-known almond milk brand to fund dividend payouts to shareholders.

Morgans analyst Belinda Moore said Freedom Foods had had a challenging second half and announced two weak trading updates in recent months.

"Like a lot of these food and beverage companies they've all been impacted by the government-imposed restrictions, and particularly the out-of-home market which is a really high margin channel. They've all been hit for six because the customer outlets were either closed, or customers were slow to return to them," she said.

Ms Moore said the Perich family had been "very supportive, long-term shareholders" in Freedom Foods.

Freedom Foods declined to comment.