Freedom Foods CFO resigns, CEO on leave, chairman takes executive role
UPDATE: Freedom Foods has found $60 million of out-of-date food stock, some dating back three years, culminating in its financial head leaving and its managing director placed on leave.
UPDATE: THE discovery of obsolete and out-of-date food stock dating as far back as 2017 has resulted in Freedom Foods having to write off $60 million in inventory.
The stock mostly relates to milk products discovered as the company moved its inventory from five external warehouses into its own facilities.
Freedom Foods declared in a market update on May 29 of “initial estimates” of a $25 million writedown in inventory but executive chairman Perry Gunner said the company’s board only learnt of another $35 million in out-of-date product today.
Mr Gunner did not rule out further writedowns.
“This revised estimate is still subject to further analysis,” he said.
The company, which went into a trading halt yesterday, has now had its share trading suspended for 14 days while it further investigates the embarrassing problem.
Mr Gunner said the company had hoped to “rework” the obsolete and out-of-date stock by converting it into milk powder or putting it through a protein fractionisation process but it became clear the “practicality and profitability of the reworking didn’t stack up”.
He could not answer why the out-of-date stock had not been picked up through stocktaking audits over the past three years.
Freedom Foods chief financial officer and company secretary Campbell Nicholas resigned on Tuesday and managing director and chief executive officer Rory Macleod was placed on leave until another announcement was made early next week.
Mr Gunner would not comment on Mr Macleod’s tenure at the company due to “employment obligations”.
But Mr Macleod is not expected to stay with the company.
Asked what he expected of a CEO if Mr Macleod was replaced, Mr Gunner said: “someone who could take this business forward”.
Freedom Foods also announced that 61 jobs would be lost with a result of a downturn in sales, 20 of which had not been filled since the outbreak of the COVID-19 pandemic.
Freedom Foods appointed its group general manager of corporate development, Stephanie Graham, as its acting chief financial officer yesterday, and its commercial director Brendan Radford as acting CEO.
Investors dumped 15 million shares on the market yesterday before the company was placed in a trading halt.
The share price plummeted 14.5 per cent to $3.01 prior to the stock going into a trading halt, wiping $140 million off its market capitalisation.
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