TasFoods Q2 Revenue Falls 19.9% Amid Poultry Price Pressures
TasFoods reported a 19.9% revenue decline in Q2 2025 amid persistent poultry oversupply and discounted prices in Tasmania, while advancing strategic initiatives to stabilize operations and improve shareholder returns.
- 19.9% revenue decline driven by oversupply and price pressure in poultry
- Nichols Poultry maintains flat gross margins through cost efficiencies
- Pyengana Dairy sales mixed – strong retail growth but overall decline due to aging constraints
- Key leadership hires boost production efficiency at Nichols Poultry
- Strategic review underway alongside property sale and export accreditation efforts
Challenging Market Conditions
TasFoods Limited (ASX – TFL) has revealed a tough second quarter for 2025, with total revenue falling nearly 20% compared to the previous corresponding period. The primary culprit remains the oversupply of poultry in the Tasmanian market, largely from mainland Australian processors and wholesalers, which has driven wholesale prices down by as much as 38%. This intense competition has pressured sales volumes and pricing across all channels, creating a challenging environment for the company’s core poultry division.
Operational Resilience Amid Pressure
Despite these headwinds, Nichols Poultry, TasFoods’ poultry processing arm, managed to hold gross margins steady year-on-year. This was achieved through strategic input cost reductions, notably from switching feed suppliers and improving feed efficiencies. The company also made key leadership appointments in operations and maintenance, which have already yielded improvements in production efficiency, equipment reliability, and product quality.
Mixed Fortunes for Dairy and Pet Treats
Pyengana Dairy, another TasFoods brand, experienced a 36% drop in sales for the quarter, attributed mainly to cheese aging limitations and a decline in tourist traffic to its farmgate café. However, the brand continues to expand its footprint in Coles stores nationally, with a 62% increase in revenue and volume since October 2024. Meanwhile, Isle and Sky pet treats saw a 10% increase in sales volume and revenue, benefiting from a new distribution partnership with Natures Best, one of Australia’s largest pet retail networks.
Financial Position and Strategic Initiatives
Cash flow remained under pressure, with the company ending the quarter with a $1.3 million overdraft. TasFoods has access to $2 million in working capital facilities and is actively managing costs, achieving an 18.3% reduction in indirect costs compared to the prior year. The unconditional sale of the Burnie property, expected to settle by mid-September, is anticipated to improve liquidity and extend the company’s funding runway beyond one quarter.
Looking Ahead – Strategic Review and Growth Plans
TasFoods is conducting a comprehensive strategic review of all business units, aiming to conclude by Q4 2025. This includes exploring partnerships, optimizing the poultry supply chain, and scaling export opportunities for Pyengana Dairy, which is on track for export accreditation in the second half of the year. The company is also focused on enhancing operational efficiencies and cost management to navigate the prolonged oversupply and subdued consumer spending environment.
While the near-term outlook remains challenging, TasFoods’ proactive approach to operational improvements, strategic asset management, and market expansion efforts signal a commitment to restoring sustainable profitability and shareholder value.
Bottom Line?
TasFoods faces a pivotal year as it navigates market oversupply and pursues strategic transformation to secure its future.
Questions in the middle?
- Will the strategic review lead to divestments or restructuring of key business units?
- How soon can Pyengana Dairy’s export accreditation translate into meaningful revenue growth?
- What impact will the Burnie property sale have on TasFoods’ liquidity and operational flexibility?
