Noumi Limited’s Q2 FY25 results reveal a resilient plant-based milks segment driving growth, even as traditional dairy and nutritionals face margin pressures amid a challenging market.
- Q2 FY25 revenue slightly down 0.7% to $150.2 million
- Plant-based milks revenue up 5.1%, led by Milklab brand expansion
- Dairy and nutritionals revenue declined 3.1%, with export volumes falling sharply
- Positive operating cash flow of $10.5 million despite legal expenses
- Convertible notes fair value expected to rise significantly by 2027 maturity
Mixed Revenue Performance Reflects Market Shifts
Noumi Limited (ASX: NOU), a prominent player in Australia’s FMCG dairy and plant-based sectors, reported a marginal 0.7% decline in consolidated revenue for the quarter ended 31 December 2024, totalling $150.2 million. This slight dip masks divergent trends within its core segments, highlighting the evolving consumer landscape.
The company’s plant-based milks division demonstrated robust growth, with revenues rising 5.1% to $45.7 million. This uplift was driven by strong domestic retail sales, particularly from the Milklab brand, which saw notable gains in oat and almond milk formats. Export sales also surged by 33%, underscoring Noumi’s expanding international footprint in plant-based categories.
Dairy and Nutritionals Face Headwinds
Conversely, the dairy and nutritionals segment experienced a 3.1% revenue decline to $104.5 million. While domestic long-life dairy sales showed modest growth, export volumes fell sharply by 30.1%, reflecting ongoing global market challenges and reduced demand. Margin pressures persist due to excess processing capacity in the sector, elevated farmgate milk prices, and rising input costs, factors that Noumi acknowledges as constraining profitability.
Within nutritionals, the company streamlined its Crankt product range to focus on sustainable growth, resulting in a sales decline. However, nutritional ingredients, particularly lactoferrin, rebounded strongly with an 86.5% increase, aided by the resolution of prior production issues.
Cash Flow and Financial Position
Noumi reported a positive operating cash flow of $10.5 million for the quarter, despite incurring $3.4 million in legal expenses related to ASIC and legacy US litigation matters. The company also received $1.6 million from the release of a term deposit tied to its US litigation obligations. At quarter-end, unrestricted cash stood at $26.5 million, supplemented by $10 million in undrawn credit facilities, providing a combined liquidity buffer of $36.5 million.
Capital expenditure remained modest at $1.4 million, reflecting ongoing investments in property, plant, and equipment. The company also made $4.6 million in cash payments on its convertible notes, which are carried at fair value and expected to increase substantially to a redemption value of $603.1 million by their 2027 maturity.
Strategic Outlook and Market Caution
Noumi’s management expressed cautious optimism, highlighting progress in growing the plant-based segment both domestically and internationally, alongside more consistent performance in dairy and nutritionals. The company anticipates an improvement in adjusted operating EBITDA for the six months ending December 2024 compared to the prior year.
However, Noumi remains vigilant about the broader macroeconomic environment, particularly consumer spending trends in Australia. The competitive landscape in dairy processing, coupled with fluctuating commodity prices and input costs, continues to pose risks. The recent settlement of a shareholder class action, pending court approval, marks a significant step in resolving legacy issues predating 2021, potentially clearing the way for renewed strategic focus.
Bottom Line?
Noumi’s plant-based momentum offers a bright spot, but dairy sector pressures and financial obligations warrant close investor scrutiny.
Questions in the middle?
- How will Noumi sustain growth in plant-based milks amid intensifying competition?
- What impact will rising convertible note liabilities have on Noumi’s balance sheet and future financing?
- Can Noumi’s dairy and nutritionals segment regain export market share in a challenging global environment?