Australia’s Freedom Foods Group is to lay off 41 staff, it has announced.
And it has told the market that it will have to write down an extra AUD35m (US$24.1m) of inventory. In a trading update in late May Freedom Foods had said it would have to write down about AUD25m of inventory but it now says this amount has more than doubled to around AUD$60m.
It is the latest chapter in a troubled week in which Freedom Foods’ CFO has resigned, the company’s CEO has gone “on leave” and it was forced to halt trading in its shares.
In an announcement today (25 June) to the Australian Securities Exchange (ASX), the company said 61 positions are to be terminated with 41 staff losing their jobs.
Freedom Foods, which produces free-from cereals and snacks and also supplies fresh milk, milk drinks and plant-based beverages, also used the statement to try and reassure the market about its current standing in relation to investors and customers.
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“The company have been advised by [cornerstone investors] the Perich family that it has its ongoing support for the company’s development and capital requirements as they arise,” it said.
It added: “We continue to see increasing demand and customer enquiry across our key brands and markets with an emphasis on dairy, nutritionals and plant beverages.”
On Tuesday (23 June), Freedom Foods announced CFO and company secretary Campbell Nicholas has resigned with immediate effect.
That news led to the company’s shares plunging by more than 16% by mid-morning.
That in turn led to Freedom Foods halting trading in its shares yesterday (24 June) when it additionally announced that its CEO and managing director Rory Macleod was “on leave pending a further announcement”.
This week’s ructions come less than a month after Freedom Foods said it expects full-year profits to be “materially impacted by the Covid-19 outbreak as the crisis hit sales in the out-of-home segment.
In its trading update on 29 May, Freedom Foods said it expected to incur an estimated writedown of AUD25m on the carrying value of inventory linked to the consolidation of the company’s “external warehousing activities, together with a detailed review of product offerings and formats”.
Earlier this month, US investment vehicle All About Healthy Foods Holdings (AAHFH), which has a stake in Freedom Foods, revealed it was pulling the plug on the operations of its All About Healthy Foods arm.
AAHFH, which was was unveiled by AFT Holdings in January 2018, was set up to focus the investor’s moves in food in one group.
It held AFT’s ownership of US plant-based foods maker Atlantic Natural Foods, as well as its investment in Freedom Foods.
The AAHFH operations include the distribution in the US of Australia’s Freedom Foods Group. Covid-19 had “created an overwhelming challenge for the US supply chain from Australia”, AFT said last week, leading Freedom Foods to stop selling its products in the US.
“Freedom Foods has withdrawn its products from sale into the US market until the future is clearer after Covid-19,” Hines added. “The sales and distribution for North America will be consolidated into Atlantic Natural Foods.”
just-food contacted Freedom Foods for comment.
