Pure Foods Tasmania reports a $6.85 million half-year loss, driven by a strategic operational reset and loan covenant breach, while showing signs of stabilisation and margin improvement.
- Half-year loss of $6.85 million, a 415% increase from prior period
- Revenue declined 18% to $2.61 million
- Debt reduced by $2.5 million and $1.76 million capital raised
- Gross profit margin improved to 29.5%, with several EBITDA positive months
- Breach of loan covenant triggers material uncertainty over going concern
Financial Performance and Operational Reset
Pure Foods Tasmania Limited has reported a significant half-year loss of $6.85 million for the period ending 31 December 2025, marking a 415% increase compared to the same period last year. Revenue fell 18% to $2.61 million, reflecting ongoing challenges in the premium Tasmanian food sector. However, the company is in the midst of a strategic operational reset aimed at stabilising the business and setting a foundation for future growth.
The Board has shifted away from a growth-driven strategy towards a more disciplined approach focused on margin improvement and cost control. This has involved reducing debt by $2.5 million, raising approximately $1.76 million in new capital, and streamlining operations, including eliminating an executive management layer and consolidating locations. These measures have contributed to a marked improvement in gross profit margin, which rose to 29.5% from just over 10% two years prior.
Balance Sheet and Liquidity Challenges
Despite operational progress, Pure Foods Tasmania faces significant financial headwinds. The Group breached a financial covenant on its $1.6 million loan facility with the Commonwealth Bank of Australia (CBA) for two consecutive quarters. This breach grants the bank the contractual right to issue a 90-day notice to withdraw support and demand repayment, creating material uncertainty about the company’s ability to continue as a going concern.
At 31 December 2025, the Group’s current liabilities exceeded current assets by $1.7 million, and cash and cash equivalents were in overdraft by $242,695. The company is actively engaged with CBA to refinance its facilities and extend its $250,000 overdraft, which is due to expire in February 2026. The Board remains cautiously optimistic, citing improved EBITDA performance and a strengthened capital base as reasons to believe the company can meet its obligations.
Strategic Growth Initiatives
Alongside financial restructuring, Pure Foods Tasmania has made strategic moves to expand its market presence. The company secured expanded national distribution deals, including new ranging with Costco Australia and relaunching its Tasmanian Pâté range into Drakes Supermarkets. It also broadened its footprint in Coles supermarkets, significantly increasing brand reach.
Additionally, the acquisition of premium ice cream brand Elato has established a new Ice Cream Division, combining Elato with the Cashew Creamery range under a unified growth strategy focused on premium, better-for-you, and plant-based products. The company also entered a contract packing agreement with a Sydney-based seafood providore, improving factory utilisation and operational efficiency.
Outlook and Market Position
With the operational reset largely complete, Pure Foods Tasmania’s Board is prioritising disciplined top-line growth for the remainder of the financial year. The company aims to leverage its leaner cost structure and improved margins to drive organic growth, expand national distribution, and pursue selective value-accretive opportunities.
While the financial results highlight ongoing risks, the Board’s focus on margin expansion and cash flow improvement signals a cautious but positive outlook. The company’s ability to convert its commercial pipeline and secure refinancing will be critical to sustaining this momentum.
Bottom Line?
Pure Foods Tasmania’s turnaround hinges on successful refinancing and sales growth amid lingering financial uncertainties.
Questions in the middle?
- Will Pure Foods Tasmania secure refinancing to avoid lender-imposed repayment demands?
- How quickly can the company convert its expanded distribution agreements into sustained revenue growth?
- What impact will the Elato acquisition have on the Group’s profitability and market positioning?