Farm Pride Foods reports a 15% rise in production following successful repopulation of Avian Influenza-impacted farms, alongside improved cash flow and strategic loan conversion.
- 15% increase in farm production quarter-on-quarter
- Net operating cash inflows of $1.258 million
- Repopulation of three Avian Influenza-impacted farms completed
- $915,000 director’s loan converted to equity, reducing finance costs
- Cash on hand at $5.864 million with $2.018 million unused financing facilities
Production Recovery and Growth
Farm Pride Foods Limited (ASX: FRM) has reported a significant operational rebound in the quarter ended 31 March 2025, with total farm production increasing by 15% compared to the previous quarter. This growth follows the successful repopulation of three farms in the Lethbridge, Victoria area that were previously impacted by Avian Influenza (AI). Each farm is now fully stocked with new laying flocks, setting the stage for further production gains as these flocks mature over the coming quarters.
The company’s focus on biosecurity measures and infrastructure improvements has been pivotal in this recovery. Investments totaling $0.231 million were made during the quarter to enhance farm infrastructure and biosecurity protocols, reflecting a commitment to mitigating future disease risks and stabilizing production capacity.
Financial Performance and Cash Flow
Farm Pride’s financial health showed marked improvement, with net operating cash inflows reaching $1.258 million. Receipts from customers rose by 8% to $25.25 million, driven by higher production volumes. The company’s cash position remains robust, ending the quarter with $5.864 million on hand, which includes a $1.017 million cash-backed rental guarantee for its Keysborough production facility. Additionally, $2.018 million in unused financing facilities provides further liquidity flexibility.
Capital expenditure during the quarter included $0.231 million on farm infrastructure and biosecurity, alongside $1.031 million on repairs and maintenance, underscoring ongoing efforts to enhance operational reliability and efficiency. Year-to-date maintenance spending has increased by $1.564 million compared to the previous financial year, highlighting a strategic shift towards sustaining asset integrity.
Capital Structure and Cost Management
A notable development in Farm Pride’s capital structure was the conversion of a $915,000 director’s loan from Mr. George Palatianos into equity, approved at the company’s February 2025 General Meeting. This move reduces finance costs and strengthens the balance sheet by lowering debt levels. The company continues to manage cost pressures, focusing on efficiency improvements and pricing strategies across its shell and product egg segments to mitigate rising input costs.
Farm Pride maintains two primary loan facilities: a $12.555 million secured facility with Merricks Capital at an interest rate of 12.66%, and a $2 million secured receivables facility with AMAL Trustees at 10.74%. The company’s proactive approach to debt management and operational improvements positions it well to navigate ongoing market challenges.
Outlook and Strategic Focus
Looking ahead, Farm Pride expects production to continue increasing as new flocks mature, supported by ongoing biosecurity enhancements and infrastructure investments. The company’s integrated model, spanning farming, processing, and marketing of eggs and related products, remains focused on meeting evolving market demands, including the growing preference for free-range and cage-free eggs.
Farm Pride’s commitment to sustainability is also evident in its manufacturing practices, including the use of recycled newsprint and cardboard for egg cartons. This environmental responsibility complements its corporate governance and social responsibility initiatives, reinforcing its market position.
Bottom Line?
Farm Pride’s operational rebound and financial discipline set a solid foundation, but cost pressures and biosecurity vigilance remain critical as production scales.
Questions in the middle?
- How will Farm Pride manage ongoing cost inflation in feed and inputs amid production growth?
- What impact will the loan-to-equity conversion have on future financing flexibility and shareholder dilution?
- Can the company sustain biosecurity improvements to prevent future Avian Influenza outbreaks?