Freedom Foods Group Limited (ASX: FNP) is having 10% equity shareholding in Australian Fresh Milk Holdings (AFMH) which is based in Gooloogong, Australia. On 1 November 2018, Freedom Foods Group Limited announced that Australian Fresh Milk Holdings (AFMH) have entered into an agreement to purchase the Coomboona Dairy operation in Northern Victoria. Following this news, the shares of FNP initially uplifted by 0.198 percent as on 1 November 2018 and were seen to be trading flat at the time of writing.
The acquisition of the Coomboona Dairy operations will expand the AFMH Platform into Northern Victoria. Further, it will also provide opportunity to leverage its integrated approach to deliver sustainable production of high-quality milk which will support range of value-added product opportunities.
Currently, Australian Fresh Milk Holdings is operating as a fully integrated dairy farming operation, Moxey Farms, located in New South Wales. After the purchase of Coomboona Dairy operation, AFMH will become the largest dairy producer in Australia with current operations forecasting over 150 million litres of production into 2019. Freedom Foods is planning to utilize a growing proportion of the dairy milk output from both Moxey Farm and Coomboona Dairy for its Australia’s Own Kid’s Milk and other dairy product formats.
In the recently released annual report, FNP informed that FY 2018 was the peak of a significant investment cycle in building its manufacturing capabilities to meet growth and demand across the key platforms of dairy and plant-based beverages and cereals and snacks. Further investment in expanding capability will continue in FY 2020 including key projects in dairy nutritionals, yoghurt and UHT bottle formats and sales and earnings from these new product streams are projected to impact in FY 2020 and beyond.
In FY 2018, FNP reported underlying operating EBITDA of $39.2 million which is an increase of 49.5 percent as compared to the previous corresponding year. The net sales revenue of the company increased by 35 percent over last year to $353 million. The net profit after tax of the company increased by $5.2 million to $12.7 million in FY 2018 as compared to the corresponding previous year. For FY 2019, the company is expecting the net sales to be in the range of $500 million to $530 million. The board declared partially franked final dividend of 2.75 cents per ordinary share in November 2018, taking total dividends for FY 2018 to 5.0 cents per share.
In the month of March 2018, the company successfully completed $200 million equity raising to fund acceleration of incremental capacity expansion programs and provide balance sheet flexibility for growth including working capital requirements and potential acquisitions and alliances. In FY 2018, the company also completed 10 percent equity investment into Australia’s Own Dairy Group China (AO China), operating the Australia’s Own branded Kid’s Milk products in China.
In the last six months, the share price of FNP decreased by 11.54 percent as on 31 October 2018, and traded at a PE level of 84.620x. FNP’s shares traded at $5.060 with a market capitalization of circa $1.23 billion as on 1 November 2018 (AEST 2:00 PM).
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