TasFoods Reports $10.7m FY24 Loss; Revenue Down 3.7%, EBITDA Loss Narrows

• FY24 net loss after tax of $10.7 million including $6 million non-cash impairment
• Revenue for continuing operations down 3.7% to $46.8 million
• Completed Redbank Poultry integration and feed supply optimization
• Expanded Isle & Sky pet treats with new 3-year distribution deal
• Pyengana Dairy targets export accreditation and product range expansion

Challenging Market Conditions

TasFoods Ltd has revealed a tough financial year ending December 2024, posting a net loss after tax of $10.7 million. The loss was heavily influenced by a $6 million non-cash impairment charge on Nichols Poultry assets, reflecting the impact of an unprecedented surplus of chicken supply flooding the Tasmanian market. Revenue from continuing operations declined by 3.7% to $46.8 million, underscoring the difficult trading environment.

Despite these headwinds, the company reported a 35% improvement in operating EBITDA loss, narrowing it to $2.3 million from $3.5 million the previous year. This improvement was driven by cost reduction initiatives and operational efficiencies, including a $3.8 million cut in corporate overheads.

Strategic Restructuring and Operational Advances

Following a significant restructure in 2023, TasFoods has streamlined its operations to better withstand market volatility. A key milestone was the full integration of Redbank Poultry, which secured the supply chain and strengthened the company’s commercial position. Additionally, switching feed suppliers from Inghams to Ridley improved feed conversion ratios by approximately 6%, enhancing production efficiency.

The company also invested in advanced manufacturing analytics to optimize poultry processing, aiming to reduce costs further and improve flexibility. These operational improvements have been critical in managing the oversupply challenge and protecting margins.

Growth Focus: Pet Treats and Dairy Expansion

TasFoods is actively pivoting towards growth segments to diversify revenue streams. The Isle & Sky pet treats brand continues to expand, supported by a new three-year sales and distribution agreement with Natures Best, a major pet product distributor. This partnership not only broadens market access but also leverages poultry waste streams to develop new pet food products, tapping into the growing Australian pet food market valued at $33 billion annually.

Meanwhile, Pyengana Dairy is positioned for growth with plans to achieve export accreditation by June 2025. The dairy division has already seen an 8% increase in gross profit margin, driven by expanded national distribution and product innovation including shorter maturation cheeses and flavored varieties. The company is also enhancing its café and visitor centre to build brand equity domestically and internationally.

Financial Position and Outlook

At year-end, TasFoods held net tangible assets of $7.1 million and cash reserves of $0.5 million, supported by $2.4 million in undrawn credit facilities. The balance sheet reflects a cautious but stable footing as the company continues to reduce overhead costs and evaluate capital expenditure carefully.

Looking ahead, TasFoods aims to stabilize its core poultry business by strengthening grower networks and optimizing processing workflows. The company’s strategic focus on pet treats and dairy exports offers promising avenues to mitigate volatility in poultry earnings and build a more resilient, growth-oriented business.

Bottom Line?

TasFoods’ FY24 results highlight the tough road ahead, but strategic pivots in pet treats and dairy could reshape its trajectory.

Questions in the middle?

• How quickly can TasFoods scale its pet treats segment to offset poultry market pressures?
• Will Pyengana Dairy’s export accreditation unlock significant international revenue streams?
• Can further cost reductions and operational efficiencies sustain margin improvements amid market volatility?