FFI Holdings turns stronger food earnings into a new property growth plan

Food manufacturing drives earnings recovery

FFI Holdings Limited (ASX:FFI) has put the one-off property gain of the previous year behind it, reporting a 6.8% increase in underlying profit before tax to $4.62 million for the year ended 30 June 2026. Statutory profit before tax fell from $9.52 million to $4.62 million because FY2025 included a $5.19 million investment property revaluation, making the underlying comparison the more useful measure of operating performance.

Revenue from continuing operations rose 7.4% to $62.76 million, with food operations doing most of the work. Food sales increased 8.2% to $61.39 million and segment profit before tax climbed 16.6% to $4.44 million. The company attributed the result to operational improvements, while noting that previously elevated cocoa raw material costs had returned to more normal levels.

Cash flow reverses last year’s pressure

The sharper improvement came through cash generation. Operating cash flow reached $10.54 million, compared with an outflow of $5.28 million in FY2025, primarily because working capital requirements fell. Inventory declined to $13.24 million from $18.25 million, while payments to suppliers and employees dropped to $50.42 million from $61.13 million.

FFI ended the year with $4.24 million in cash and no bank borrowings, after repaying a $4 million loan during the period. The company still has a $4 million facility available, subject to annual bank review, giving it some funding flexibility as it moves towards its next property project. Net assets increased 4% to $61.94 million, with net tangible asset backing rising to $4.52 a share.

Cockburn development becomes the next test

The balance sheet will now support a planned factory and warehouse facility of about 4,000 square metres on the group’s Cockburn industrial property holdings. Construction is expected to begin in FY2027, with estimated development costs of approximately $5.1 million funded from existing cash reserves and working capital. The annual report does not provide an earnings forecast for the project, so its contribution will depend on construction, leasing and operating progress.

Property income was weaker during the year, falling 26% to $1.25 million after a roughly two-month vacancy and costs associated with replacing a lease. The new tenant is a Western Australian Government agency under a 10-year agreement, but commencing annual rent is $938,000, below the previous $1.28 million. FFI says the longer lease and quality of the lessee provide greater security for future cash flows, although the lower starting rent remains a direct drag on property earnings.

Dividend holds despite lower statutory profit

Directors declared a fully franked final dividend of 12.5 cents per share, unchanged from the prior year. Combined with the 10-cent interim dividend, the FY2026 distribution remains 22.5 cents per share. The final payment is scheduled for 30 October 2026, meaning the company is maintaining shareholder distributions while committing capital to the proposed development.

That combination leaves FFI with a fairly clear set of near-term markers: whether food margins hold as input costs move, whether the Cockburn build begins on schedule and how quickly the new property income settles into its lower contractual base. The group has the cash and borrowing capacity to proceed, but the next phase will test whether that financial strength can be converted into higher recurring earnings rather than simply another round of asset value.