Australian Dairy Announces the Extension of ‘The Collective’ Contract

AHF

On 8th April 2019, Australian Dairy Nutritionals Group (ASX: AHF) announced the major production contract extension between Camperdown Dairy Company’s (CDC) and The Collective, a yoghurt brand in New Zealand. As per the announcement on April 23, 2018, Camperdown Dairy entered into a 4-year contract with The Collective, and in July 2018, Collective’s 10 products ranged in the Woolworths stores nationally.

The company management is satisfied with the growth in sales and production volumes, which have been rising steadily since the beginning of 2019. Additionally, Camperdown Dairy has commenced manufacturing of seven new products for The Collective. It has agreed to invest in a high-speed pouch machine expected to be operational in late 2019, predominantly to enhance CDC’s production capabilities and support current and future production capacity for The Collective. With this development, The Collective has agreed to extend the term of the production agreement by two years, taking the initial term from four years to six years.

Camperdown Dairy now expects sales revenues to exceed $70 million over the extended term of the agreement based on the volume projections for the existing product range and current ranging. The Board is pleased with the extension of the relationship with the Collective and vows to support The Collective’s ongoing product innovation initiatives, while at the same time advancing CDC’s production capabilities.

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In a previous update, Australian Dairy announced about the purchase of infant formula plant, which will include nutritional mixing equipment, evaporator and dryer. The plant produces around 400,000 – 600,000 tins of infant formula and other products per annum. After the plant acquisition, the group will have the ability to produce its own company-branded range of organic infant formula manufactured using organic milk sourced from its farms. As per the release, the plant can also produce skim and whole milk powders including from niche milks such as sheep, goat and camel, which are in high demand and command high prices.

One of the group’s substantial holder, Jimmy Crow Limited internally transferred its voting rights to another JCC Group entity effective from February 21, 2019. Another holder, Corporate Solutions Pty Ltd acquired 15,309,892 number of securities with 5.73% voting rights effective from February 21, 2019.

In its half-yearly summary, the group highlighted its key milestones of substantial progress, where it completed the purchase of Flahey’s Nutritionals and new ranges of infant formula. It brought forward the organic milk timeline with the purchase of “Yaringa” farm. It secured an exclusive contract with The Collective for the material volume of yoghurt and related products being sold nationally.

On stock information, at the time of writing (on April 8, 2019, AEST: 02:55 PM) the stock of Australian Dairy was reported at $0.145, with a market capitalisation of ~$38.76 million. Its 52 weeks high was at $0.25 and 52 weeks low at $0.115, with an average volume of 169,880. Its absolute return for five years, one year and three months are 141.67%, -25.64% and 20.83%, respectively.


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