Pure Foods Tasmania Cuts Costs and Restructures Debt as ASX Suspension Persists

Operational Performance and Financial Highlights

Pure Foods Tasmania Limited (ASX: PFT) has released its December 2024 quarterly activities report, revealing a modest revenue increase to $1.708 million for the second quarter of fiscal 2025. This represents a $239,000 uplift from the previous quarter, signalling early traction from the company’s recent strategic initiatives.

More notably, the company reported a gross profit margin of 17.1%, a significant turnaround from a negative 11.4% in the corresponding period last year. This improvement is largely attributed to a rigorous focus on cost reduction, including the elimination of low-margin and unprofitable stock keeping units (SKUs).

Despite still operating at a loss, Pure Foods Tasmania narrowed its normalised pre-tax loss to $190,317 and reduced its EBITDA loss to $252,544, down from $263,764 in the prior quarter and a substantial $653,088 loss in 2Q24. These figures reflect the impact of cost-saving measures and operational efficiencies implemented under the leadership of Executive Chairman Malcolm McAully.

Strategic Cost-Cutting and Operational Restructuring

Since Malcolm McAully’s appointment as Executive Chairman, the company has embarked on a comprehensive restructuring program. Key priorities include streamlining the workforce, realigning management roles, and identifying surplus plant and equipment. These efforts have led to redundancies and a reduction in wages, contributing to a more sustainable gross profit margin.

Operational improvements extend to production and logistics, with enhanced workforce planning and freight logistics analysis expected to yield further efficiencies in the second half of FY25. The company has also transitioned to a brokerage sales model for major supermarket chains, which has already increased sales volume and promises a strong trading period over Easter.

Debt Restructuring and Financial Stability

On the financial front, Pure Foods Tasmania has made significant strides in debt reduction and restructuring. The company raised $400,000 through a share placement to new board member Robert Knight and has repaid a $500,000 high-interest loan. It also settled a supplier claim, improving its financial position by over $250,000.

Importantly, the company renegotiated its finance arrangements with the Commonwealth Bank of Australia (CBA), extending key loans and converting temporary facilities into longer-term arrangements expiring in mid-2026. These moves provide greater financial flexibility and reduce near-term repayment pressures.

ASX Suspension and Market Outlook

Pure Foods Tasmania’s shares have been suspended from trading on the ASX since October 2024 due to concerns over compliance with Listing Rule 12.2. The company has responded by reissuing audited financial statements without qualification, although the auditor noted ongoing going concern risks.

The Board remains engaged in ongoing dialogue with the ASX, confident that it has addressed all queries and complied with listing requirements. The company is hopeful that the recent operational improvements and financial disclosures will lead to a reinstatement of trading in the near term.

Meanwhile, Pure Foods Tasmania continues to explore potential business opportunities, including acquisitions and partnerships, aiming to achieve economies of scale and diversify its product offerings. While no deals have been finalized, the company remains active in due diligence and strategic assessment.

Looking Ahead

With annualised cost savings exceeding $1.26 million and a clear plan to return to month-by-month profitability by the fourth quarter of FY25, Pure Foods Tasmania is navigating a challenging turnaround. The success of its operational restructuring, debt management, and ASX negotiations will be critical to restoring investor confidence and unlocking shareholder value.