What is Making Freedom Foods’ Shares Surge Up On ASX?


Freedom Foods Group Limited (ASX: FNP) announced its non-involvement in the bidding process for the Lion Dairy and Drinks Portfolio (LDD).

Earlier in a recent market commentary, it was speculated that there was Company’s potential involvement in an acquisition of the Lion Dairy and Drinks Portfolio (LDD), subject to a sale process by Kirin Holdings Company Limited.

In the previous update, the company announced its half-yearly results for the financial year 2019. It reported an increase in its Sales by 31% to $209 Mn. It’s Gross Margin increased to 24.7% from 23.3% on PCP basis. Its Operating EBITDA increased by 31.2% to $21 Mn; however, its EBITDA margin remained steady at 10% as the Group progresses through a significant upgrade of equipment and processes. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

The decent result outcome was due to increased earnings from Plant Beverage, Dairy Beverage, and Nutritionals, offset by reductions in Specialty Seafood and Cereals & Snacks.

The company reported an increase in its net operating profit before tax by 17.1% to $8.9 Mn. This reflected increased operating EBDITA offset by higher depreciation costs as compared to the previous period. Its Statutory net profit after tax increased by 26.4% to $3.7 Mn, which included unrealised foreign exchange losses and one-off non-operating costs of $1.2 million relating to the write-down of inventory and discontinued product formats due to changes in the Shepparton and Leeton operational footprints and the decision to exit a number of major contract manufacturing arrangements for key brand and private label customers in cereals and milling related activities.

The board of directors declared a partially franked (50%) interim dividend of 2.25 cps with payment date on May 1, 2019, and record date on April 3, 2019. Its DRP election date has been set on April 4, 2019.

At the end of December 31, 2018, the Group supplied milk of more than 250 million liters per annum with more than 45 direct suppliers on board. The group expects that the direct supply strategy seeks to align a multi-year volume, quality and pricing relationship that supports the growing demands of the Group and provides the farmer partners with certainty and a stable revenue basis to invest in their farms.

The Group is expecting to increase its market position in the key markets such as Australia / New Zealand, China, SE Asia, and North America. It expects the net sales revenue in FY 2019 to be in the lower end of the range of $500 million – $530 million, a substantial increase in FY 2018.

On stock information, Freedom Foods Group’s shares are trading at $4.5, up 5.14% (AEST: 2:49 PM on March 25, 2019) with the market capitalization of ~$1.05 Bn. Its current PE multiple is at 70.98x, and its last EPS was noted at 0.06 AUD. Its annual dividend yield has been noted at 1.17%.

Today, it made a day’s high at $4.57 and day’s low at $4.21. Its 52 weeks high was at $7 and 52 weeks low at $4.15 with an average volume of 254,018. Its absolute returns for 5 yrs, 1 yr, and 6 months are 52.07%, -17.69%, and -32.06% respectively.


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