Noumi Navigates Modest Growth and Legal Hurdles in Q3 FY25
Noumi Limited reported a 2.8% revenue increase to $141.4 million in Q3 FY25, buoyed by gains in its Dairy and Nutritionals segment, while managing legacy legal costs and maintaining strong cash flow.
- Q3 FY25 revenue rose 2.8% to $141.4 million
- Dairy and Nutritionals segment grew 3.9%, Plant-based Milks up 0.4%
- Positive operating cash flow of $15.2 million despite $2.4 million legal expenses
- Strong liquidity with $26.5 million unrestricted cash and $10 million undrawn facilities
- Victorian Supreme Court reviewing shareholder class action settlement
Steady Revenue Growth Amid Market Challenges
Noumi Limited (ASX: NOU), a prominent player in Australia's FMCG sector focused on dairy and plant-based milks, has released its Q3 FY25 results showing a modest 2.8% revenue increase to $141.4 million compared to the same quarter last year. This growth was primarily driven by a 3.9% rise in the Dairy and Nutritionals segment, which reached $98.6 million, while the Plant-based Milks segment saw a marginal 0.4% increase to $42.8 million.
The Plant-based Milks division demonstrated resilience despite disruptions from Ex-Tropical Cyclone Alfred, with domestic retail revenue up 3.3% and export sales increasing by 12.6%. The Milklab brand was a standout performer, with oat milk sales surging 29% and almond milk sales growing 4.1%. However, out-of-home sales dipped slightly by 1.7%, reflecting ongoing channel mix shifts.
Operating Cash Flow and Liquidity Position
Noumi reported a positive operating cash flow of $15.2 million for the quarter, a notable achievement given the $2.4 million in cash outflows related to ASIC, US litigation, and other legacy legal expenses. These legal costs were partially offset by $1.8 million proceeds from the release of a term deposit tied to US litigation obligations. The company ended the quarter with an unrestricted cash balance of $26.5 million and undrawn facilities of $10 million, providing a combined liquidity buffer of $36.5 million.
Capital expenditure remained conservative at $0.5 million for the quarter, contributing to a year-to-date spend of $2.7 million. Meanwhile, the company continued servicing its Convertible Notes, making cash payments of $4.6 million in Q3 FY25. The fair value of these notes, currently recorded at $372.7 million, is expected to rise to a minimum redemption value of $603.1 million by their 2027 maturity, reflecting ongoing accrual of interest and fair value adjustments.
Market and Margin Pressures Persist
Despite the revenue gains, Noumi remains cautious about the broader macroeconomic environment. The company highlighted volatility in capital and currency markets and subdued consumer spending in Australia as ongoing risks that could impact both its Plant-based Milks and Dairy and Nutritionals segments.
Within Dairy and Nutritionals, pricing for bulk commodities such as cream has improved after a weak FY24, with bulk cream revenue up 30.3% year-on-year in Q3. However, margins on long-life milk products remain under pressure due to a competitive landscape marked by excess processing capacity and elevated farmgate milk prices combined with rising input costs. Export sales of dairy long-life products declined 18.6%, underscoring challenges in international markets.
Legal Proceedings and Corporate Governance
On the legal front, Noumi disclosed that the Victorian Supreme Court is currently reviewing a shareholder class action settlement reached in October 2024. The court has set a timetable for further submissions and has reserved its judgment, leaving some uncertainty around the final resolution and potential financial impact.
The company also detailed related party payments totaling $6.2 million during the quarter, including director fees, CEO remuneration, rent payments to related entities, and interest payments on Convertible Notes. These disclosures align with transparency expectations for governance and financial reporting.
Outlook and Strategic Considerations
Noumi’s cautious tone reflects the balancing act it faces: capitalizing on steady growth in key product lines while navigating margin pressures and legacy legal costs. The company’s diversified channel strategy, particularly the growth of the Milklab brand and export expansion in nutritional ingredients like lactoferrin, offers avenues for future growth. However, the evolving competitive dynamics in dairy processing and the pending court decision on the class action settlement will be critical factors shaping investor sentiment and operational flexibility in the near term.
Bottom Line?
Noumi’s steady growth and strong cash flow provide a foundation, but legal and market uncertainties loom large.
Questions in the middle?
- How will the Victorian Supreme Court ruling on the shareholder class action impact Noumi’s financials?
- Can Noumi sustain margin improvements in its Dairy segment amid competitive and cost pressures?
- What strategies will Noumi deploy to accelerate growth in its Plant-based Milks segment?