Noumi claws back: Seeks more milk as ASIC takes legal action

Dairy and plant-based drinks maker Noumi faces significant legal action as it battles to build farmer milk supplies and revive its fortunes.

Noumi’s share price crashed from $5 in 2020 to seven cents today, with its accumulated losses hitting $722m by December 30, last year.

UHT milk, nutritionals and plant-based drinks manufacturer Noumi is offering farmers within 250km of its Shepparton factory a base milk price of $9.30 a kilogram of milk solids.

The company is trying to build on the 250 million litres it already collects from about 50 farms, with a spokesman saying Noumi wanted “to focus on building our dairy portfolio”.

“While some major milk processors released lower prices on June 1, only to raise them several days later after pressure, we have offered $9.30/kgMS as a minimum upfront because we believe a more stable price gives greater certainty to everyone.”

Stability is crucial for Noumi, formerly know as Freedom Foods, after it nearly collapsed in 2020-21 following accounting irregularities and $590 million of write downs, from which it is still recovering.

Noumi’s share price currently sits at seven cents, compared to $5 in early 2020.

The company’s latest half-year report shows Noumi’s underlying financial position deteriorated, from an accumulated loss of $697 million on June 30 last year to $722 million by December 30.

The firm’s total equity worsened over the same period, slumping from minus $149 million to minus $172 million.

In signing off on the accounts, KPMG’s auditors noted “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal cause of business”.

That material uncertainty relates to two class actions, which Noumi warned “should the group be unsuccessful in its defence of the proceedings, the group may become liable for material compensation amounts” and “there is a material risk that the company and group will have insufficient funds to be able to pay”.

Noumi also announced in February that the Australian Securities and Investments Commission had commenced civil penalty proceedings against it in the Federal Court, in relation to historic breaches of its continuous disclosure obligations in 2019, when it was trading as Freedom Foods.

But as far as farmer suppliers go, Noumi has not declared any farmer disputes from May 1, 2022 to April 30 this year.

“We are extremely proud of our longstanding relations with farmers, and, unlike many other processors, we typically work on multi-year contracts that provide farmers certainty and enable them to invest in their businesses with confidence,” Noumi’s spokesman said.