Pure Foods Tasmania reported a $1 million operating cash outflow in the September quarter due to restructuring and timing factors but anticipates positive cash flow and growth driven by new Coles product launches and operational efficiencies.
- Reported $1M operating cash outflow in Q1 FY26 amid restructuring
- Settled significant aged payables to restore supplier confidence
- Expanded Tasmanian Pâté products nationally through Coles
- Operational consolidation at Mornington to deliver cost savings
- Forecast positive cash flow and improved trading momentum in Q2
Quarterly Cash Flow Challenges Reflect Strategic Reset
Pure Foods Tasmania Limited (ASX – PFT) disclosed an operating cash outflow of approximately $1 million for the September 2025 quarter, a figure largely shaped by one-off restructuring costs and timing-related cash movements. While this outflow might raise eyebrows at first glance, the company frames it as a necessary investment to position itself for sustainable growth and profitability in the 2026 financial year.
Key Drivers Behind the Cash Outflow
The cash burn was influenced by several deliberate actions. A significant portion of aged payables was settled to rebuild supplier trust and secure more reliable supply chains. This move, while temporarily tightening cash, is expected to pay dividends in operational stability. Additionally, some suppliers shifted to cash-on-delivery terms, increasing short-term working capital needs but setting the stage for renegotiated terms as volumes grow.
Seasonal prepayments for packaging and raw materials ahead of the busy Christmas and summer period also contributed to the cash outflow. Moreover, one-off make-good costs related to relocating Daly Potato Co from Sorell to Mornington were incurred. This consolidation is projected to yield annual savings of $200,000 to $300,000 and improve operational efficiency.
Growth Initiatives and Operational Efficiencies Take Center Stage
Pure Foods Tasmania’s strategic expansion into Coles stores with new Tasmanian Pâté SKUs is a highlight, with initial sales tracking well. This national rollout required upfront investment in packaging and inventory, which is expected to translate into stronger sales and margin benefits from the December quarter onward. The company also reported wage savings of approximately $230,000 per quarter and lease savings from site consolidation, both of which will materially improve cash flow in the coming quarters.
Operational simplification through the Mornington consolidation has improved freight logistics and reduced overheads, further underpinning the turnaround strategy. The company’s pipeline of growth opportunities aims to increase plant utilisation and diversify revenue streams throughout FY26.
Outlook – Positive Momentum Amidst Structural Reset
With the bulk of restructuring costs behind it and key prepayments made, Pure Foods Tasmania enters the December quarter with a cleaner balance sheet and stronger trading momentum. The board expresses confidence in delivering improved operating performance as new retail partnerships, cost savings, and growth initiatives begin to materialize. The company’s ability to convert these operational improvements into sustained cash flow will be critical to watch in the coming quarters.
Bottom Line?
Pure Foods Tasmania’s September quarter reset sets the stage for a pivotal turnaround, but execution in the coming months will be key to sustaining momentum.
Questions in the middle?
- Will the positive cash flow forecast for Q2 materialize as expected amid ongoing market conditions?
- How quickly will supplier relationships stabilize to allow renegotiation of more favorable payment terms?
- What impact will the national Coles rollout have on Pure Foods Tasmania’s revenue and margins in FY26?