TasFoods’ Liquidity Tightens as Poultry Oversupply and Price Wars Persist
TasFoods narrowed its half-year loss by 29% despite a 21% drop in sales amid persistent poultry oversupply and discounted pricing. Strategic asset sales and cost-cutting efforts aim to stabilize the business in a challenging market.
- Statutory net loss improved to $3.6 million from $5.0 million a year ago
- Sales revenue fell 21% due to poultry oversupply and heavy discounting
- Gross margin in poultry division declined to 22%, impacted by market conditions
- Operating expenses cut by 33% through leaner corporate operations
- Strategic asset sales planned, including Pyengana Dairy and Betta Milk property
Financial Results Show Progress Amidst Declining Sales
TasFoods Limited (ASX, TFL) reported a statutory net loss after tax of $3.6 million for the half-year ended 30 June 2025, marking a 29% improvement compared to the $5.0 million loss recorded in the prior corresponding period. This progress comes despite a significant 21% decline in sales revenue to $19.9 million, primarily driven by an ongoing oversupply of poultry and aggressive discounting across wholesale channels.
The company’s poultry division, which remains a core part of its operations, saw gross margins slip to 22% from 23% a year earlier. This margin compression reflects the challenging market dynamics, including increased competition from mainland suppliers flooding both Tasmanian and mainland markets, forcing wholesale prices down by as much as 38% in some cases.
Cost Control and Strategic Asset Sales
In response to these pressures, TasFoods has implemented significant cost-cutting measures. Operating expenses in the corporate office were reduced by 33% to $1.2 million, focusing on essential services only. This leaner approach is part of a broader strategy to improve operational efficiency and preserve cash flow.
Strategically, the company is divesting non-core assets to strengthen its balance sheet. The unconditional sale of the former Betta Milk property is expected to complete by mid-September 2025, while the Pyengana Dairy business is slated for sale by the end of October 2025. These moves align with TasFoods’ Capital Management Framework, which aims to optimize asset utilization and shareholder returns.
Liquidity Challenges and Market Outlook
Despite these efforts, TasFoods’ cash position remains tight, closing the half-year with a $1.3 million overdraft and total borrowings rising to $5.9 million. Undrawn finance facilities have also decreased, underscoring the company’s liquidity constraints.
Looking ahead, management anticipates continued competitive pressure in poultry markets through 2025 and into 2026, driven by surplus supply, consumer trade-down behaviors, and rising input costs such as utilities and labor. The company remains committed to reviewing its poultry operations and asset base to build a more resilient business model amid these headwinds.
Meanwhile, the Pyengana Dairy cheese brand shows promise with expanding distribution in Coles stores nationally, despite a 38% revenue decline in the division due to production constraints and reduced tourism at its farmgate café.
Bottom Line?
TasFoods’ path to profitability hinges on navigating ongoing poultry market challenges and successfully executing its asset divestment strategy.
Questions in the middle?
- Will the sale of Pyengana Dairy and Betta Milk property materially improve TasFoods’ liquidity and debt position?
- How will TasFoods adapt its poultry operations to counter persistent oversupply and pricing pressures?
- Can the company leverage its partnership with Natures Best to accelerate growth in pet treats and diversify revenue streams?
