High Costs Force Maggie Beer to Reshape Operations Amid Profit Decline
Maggie Beer Holdings reports a sales increase for 1H FY25 but faces declining EBITDA, prompting a strategic overhaul focused on cost reduction and operational streamlining.
- Sales up 5.5%–6% in first half of FY25
- Trading EBITDA down 7%–8% despite sales growth
- Board-led strategic review targets high operating costs
- Restructuring includes senior executive cuts and divisional heads
- Sale process underway for Paris Creek Farms
Sales Growth Meets Profitability Challenges
Maggie Beer Holdings Limited (ASX: MBH) has revealed a mixed first half of fiscal 2025, with total sales from continuing operations rising between 5.5% and 6% compared to the previous corresponding period. However, this top-line improvement has been overshadowed by a 7% to 8% decline in trading EBITDA, underscoring persistent cost pressures that are eroding profitability.
Board Initiates Strategic Review to Cut Costs
Chairperson Sue Thomas emphasized that while sales momentum is encouraging, the company’s cost structure remains unsustainably high. The Board has therefore embarked on a comprehensive strategic review aimed at materially reducing the cost of doing business. This initiative is seen as critical to restoring consistent profitability and aligning operational expenses with the company’s current market capitalisation.
Operational Restructuring and Leadership Changes
As part of the cost-cutting strategy, Maggie Beer Holdings plans to simplify its operations by streamlining the organisational structure and reducing senior executive roles and head office headcount. The company will appoint divisional heads for its E-Commerce (Hampers & Gifts) and Maggie Beer Products units, each accountable for cost management, profit, and strategic direction, reporting directly to the Board.
Notably, Penny Diamantakiou, who served as joint Interim Group Chief Operating Officer and Chief Financial Officer, will depart as her roles are excluded from the new structure. The finance team will be jointly led by current Group Finance Managers, while Director Tom Kiing will take an executive role to oversee the E-Commerce transition and cost-saving initiatives. Additionally, Director Mark Lindh will spearhead the search for a new head of Maggie Beer Products and assist in interim management.
Paris Creek Farms Sale Progresses
The company continues to advance the sale process for Paris Creek Farms, which is classified as a discontinued operation as of 31 December 2024. Several interested parties are currently engaged in due diligence, signaling potential divestment that could further streamline Maggie Beer Holdings’ portfolio and focus.
Looking Ahead to Half-Year Results
Maggie Beer Holdings is currently finalising its audited results for the first half of FY25, with the announcement scheduled for 26 February 2025. The Board has committed to providing more detailed insights into the strategic review outcomes, including anticipated cost savings and operational efficiencies, at that time.
Bottom Line?
Maggie Beer’s strategic pivot to cut costs will be pivotal in determining whether sales growth can translate into sustainable profits.
Questions in the middle?
- How significant will the cost savings be from the new divisional structure?
- What impact will the departure of key executives have on operational stability?
- How will the sale of Paris Creek Farms affect the company’s financial position and focus?