Duxton Farms Faces $5 Million Quarterly Deficit Amid Ambitious Expansion
Duxton Farms has announced a strategic merger with four private agricultural companies, aiming to significantly expand its asset base and diversify its commodity exposure. The move positions the company for enhanced market presence and long-term growth.
- Proposed merger with four private agricultural companies
- Expansion to over $298 million in gross assets
- Diversification across new geographies and commodities
- Q4 operating cash flow deficit of $5.06 million due to seasonal expenses
- Recent $38 million sale of Kentucky aggregation land
Strategic Merger to Expand Agricultural Footprint
Duxton Farms Limited (ASX, DBF) has revealed plans to acquire four private companies; Duxton Dried Fruits Ltd, Duxton Orchards Pty Ltd, Duxton Bees Pty Ltd, and Duxton Dairies (Cobram) Pty Ltd; through separate schemes of arrangement. This proposed merger is set to create a substantially larger agricultural investment platform, with gross assets exceeding $298 million on a pro forma basis as of December 2024.
The merger is designed to diversify Duxton Farms’ portfolio across multiple geographies including New South Wales, Victoria, South Australia, and Queensland, and across a broad range of commodities such as dried fruits, apples, honey, and walnuts. This diversification aims to reduce operational risk and provide a more stable earnings profile compared to the existing portfolio.
Operational Highlights and Crop Updates
During the fourth quarter of FY2025, Duxton Farms reported a $5.06 million operating cash flow deficit, primarily driven by seasonal expenditures on crop preparation, including tillage, seed, fertilizer, and harvest costs for the cotton crop. Despite dry and hotter-than-average weather conditions in Forbes, winter crops established well, with early plantings performing strongly. Cotton yields are tracking in line with or slightly above budget, and preparations for the 2026 cotton crop are underway.
Livestock sales continue as animals meet market specifications, with all cattle at Cowaribin and Merriment sold and remaining sheep and lambs scheduled for sale in the coming months. Irrigation infrastructure at Yarranlea has been restored following 2022 floods, ensuring readiness for the next cotton cycle.
Financial Position and Recent Transactions
In April 2025, Duxton Farms completed the sale of the majority of its Kentucky aggregation for $38 million, which included over 6,000 hectares of arable land and water entitlements. The company ended the quarter with $21.95 million in cash and equivalents and maintained $14 million in unused financing facilities, providing a runway of over seven quarters based on current cash burn.
Notably, no share buybacks were conducted during the quarter. Related party payments amounted to $517,000, primarily for financial and management services provided by Duxton Capital (Australia) Pty Ltd.
Looking Ahead
The merger is expected to unlock operational synergies and create a platform for future growth, blending mature businesses with greenfield projects such as the Piambie pistachio development. While the transaction is subject to regulatory approvals and successful completion of schemes of arrangement, it marks a significant step in Duxton Farms’ evolution into a diversified, large-scale agricultural investment entity.
Bottom Line?
As Duxton Farms integrates new assets and navigates seasonal challenges, investors will watch closely for how the merger reshapes its growth trajectory and risk profile.
Questions in the middle?
- How will the merger impact Duxton Farms’ earnings and dividend outlook in the near term?
- What are the key regulatory hurdles and timelines for completing the merger?
- How will Duxton Farms manage operational risks amid ongoing weather variability and commodity price fluctuations?
