Farm Pride Foods has successfully recovered from Avian Influenza setbacks, improving cash flows and repaying significant debt while investing in biosecurity and production upgrades.
- Recovery of Avian Influenza-impacted farms with bird restocking completed
- Repayment of $2.6 million in finance facilities using rights issue proceeds and operating cash flow
- Operating cash inflows of $0.531 million for the quarter and $2.185 million over six months
- Investments in biosecurity and production infrastructure totaling $752,000
- Maintained a strong cash position of $3.82 million available at quarter end
Recovery from Avian Influenza
Farm Pride Foods Limited (ASX: FRM) has reported a significant operational rebound in its quarterly activities report for the period ending 31 December 2024. The company completed the recovery of its farms affected by Avian Influenza in the Lethbridge, Victoria area, with birds restocked at two farms during the quarter and the third farm stocked in January 2025. This marks a critical step in restoring production capacity after the disruptions caused by the disease.
Financial Management and Debt Reduction
Leveraging proceeds from a recent rights issue alongside operating cash flows, Farm Pride repaid $2.599 million in finance facilities during the quarter. This included payments to Oakmeadow and Scolexia, fully settling those facilities, and a $2 million repayment to AMAL Trustees, which remains available for redraw. These repayments have strengthened the company’s balance sheet, leaving it with $3.82 million in available cash at quarter end, underscoring prudent financial stewardship amid ongoing operational challenges.
Cash Flow and Operational Performance
The company reported operating cash inflows of $0.531 million for the quarter and $2.185 million over the past six months. Customer receipts rose 12% compared to the previous quarter, reaching $23.463 million. Additionally, Farm Pride received a final compensation payment of $1.1 million from the Emergency Animal Disease Compensation Scheme related to costs incurred during the Avian Influenza outbreak. The company also accelerated payments to trade creditors, reducing accounts payable turnover from 49 to 32 days, reflecting improved working capital management.
Investments in Biosecurity and Infrastructure
Recognising the ongoing risks posed by biosecurity threats, Farm Pride invested $377,000 in enhancing farming and biosecurity facilities during the quarter. A further $375,000 was allocated to production and grading infrastructure improvements, alongside $977,000 spent on repairs and maintenance. These investments demonstrate the company’s commitment to safeguarding its operations and improving efficiency, even as it navigates a challenging cost environment.
Outlook and Challenges
While Farm Pride has made tangible progress in recovering from disease impacts and strengthening its financial position, the company continues to face cost pressures, particularly from sustained biosecurity expenditures. The maintenance of a cash-backed rental guarantee of $1.017 million and unused financing facilities of $2.025 million provide additional financial flexibility. Investors will be watching closely to see how these cost dynamics evolve and how effectively the company can translate operational recovery into sustained profitability.
Bottom Line?
Farm Pride’s recovery and disciplined financial management set a solid foundation, but ongoing biosecurity costs remain a watchpoint.
Questions in the middle?
- How will ongoing biosecurity investments impact Farm Pride’s margins in the coming quarters?
- Can the company sustain improved operating cash flows as production normalises?
- What are the prospects for further debt reduction or capital raising to support growth?