Battered Freedom Foods fighting its way back from horror year

Freedom Foods has greatly narrowed its first-half losses and is on track to provide a recapitalisation proposal this month.

Freedom Foods said it was reaping the early rewards of refocusing on key products and categories around its market-leading dairy, nutritionals and plant-based beverage brands.

Freedom Foods, the battered and bruised dairy group whose shares were suspended in June after it shocked investors with a near-$600m black hole in its accounts, has greatly narrowed its first-half losses and is on track to provide a recapitalisation proposal this month.

The company said it was reaping the early rewards of refocusing on key products and categories around its market-leading dairy, nutritionals and plant-based beverage brands and that when the final pieces of its financial resurrection were put in place it would be able to deliver sustainable and long-term profitable growth.

It had been a horror year for Freedom Foods shareholders, led by its majority shareholder the billionaire Perich family, with $590m in writedowns representing 70 per cent of its then market capitalisation last year, its accounts restated and losing key executives, including the CEO.

That financial disaster washed up on the latest accounts, with Freedom Foods on Monday reporting a first-half loss of $23.9m, although that was down significantly from the loss of $63.5m in the first half of 2020. Freedom Foods has sold off businesses and restructured its operations since the financial disaster of 2020 when its shares were suspended from trade and from continuing operations its net loss was $15.2m against $50.2m in 2020.

Revenue for the December half was up 10 per cent to $317.3m while revenue from continuing operations was $291.4m, an increase of 15 per cent on the previous corresponding period.

Dairy and nutritionals revenue was up 15 per cent to $209.8m, with positive adjusted EBITDA of $8.5m. Its plant-based beverages, taking in products such as soy, almond and rice milk, saw revenue rise 17 per cent to $75.2m, with adjusted EBITDA up 21 per cent to $15.2m. Export revenue for the group was up 36 per cent to $65.5m and is now 21 per cent of overall revenue.

“These results demonstrate the potential of the businesses within Freedom Foods Group, with both our dairy and nutritionals and plant-based beverages operations delivering solid growth and positive operating earnings in a challenging period,” CEO Michael Perich said.

“Most importantly, the results show the financial and operational turnaround strategy under way across the company is beginning to gain traction.

“By working hard to remove complexity across the business — as well as improving our culture, governance and accountability — we are able to focus our attention on the brands and products with the greatest potential.

“Once the recapitalisation is complete, we will have a capital structure that allows us to continue to focus on delivering on our turnaround strategy and restore the group to sustainable and long-term profitable growth.”

That recapitalisation proposal is slated to be unveiled in mid-March, with the Perich family pledging as much as a $200m ­lifeline.

“Freedom Foods Group believes the recapitalisation plan represents the best outcome for the company and its shareholders given its current circumstances,” the company said.