The Noumi Ltd (ASX: NOU) share price was out of form on Monday and tumbled lower.
The leading Australian dairy and plant-based beverages, nutritional products, and ingredients producer's shares ended the day down 12% to 25 cents following the release of its half year results.
Noumi share price falls after COVID weighs on performance
- Net revenue down 7% to $265.3 million
- Adjusted operating EBITDA down 79% to $4.6 million
- Net loss after tax of $65.8 million
- Net loss excluding litigation settlement costs flat at $15.1 million
- Cash at bank of $16.3 million
What happened during the first half?
For the six months ended 31 December, Noumi, formerly known as Freedom Foods, reported a 7% decline in net revenue to $265.3 million.
Management advised that this reflects lower traded milk sales, the removal of an unprofitable product line, lactoferrin sales timing, and the impact of COVID-19 across the business. This was offset partially by growth in out-of-home sales and exports.
One positive was that plant-based Beverage revenue and profit growth continues, with MILKLAB and Australia's Own sales up strongly and with healthy margins.
This couldn't stop the company's margins from being crunched during the six months, though. Noumi's adjusted operating EBITDA fell 79% to $4.6 million due to the impact of COVID-19 on sales volumes, productivity and costs
On the bottom line, the company reported a net loss after tax of $65.8 million. However, this includes litigation settlement costs. If we exclude these costs, Noumi's loss was $15.1 million and in line with the prior corresponding period.
Management commentary
Noumi's Chief Executive Officer, Michael Perich, appeared disappointed with the half but pleased with the performance of some of its key brands.
He said: "The impacts of COVID-19 and the restrictions imposed to combat the pandemic have been felt across the business in this six-month period. While we were hopeful of a return to normal trading conditions, the ongoing disruption caused by COVID-19 here and overseas, as well as the emergence of the Omicron strain late in the year, resulted in a reduction in sales and earnings."
"Despite these impacts, we have continued to deliver strong growth in sales of key brands, particularly MILKLAB in the out-of-home channel, and we are making significant gains in Asian export markets. In addition, and despite delays to key improvement initiatives, we are starting to see the results of our operational turnaround program and expect these to accelerate through the balance of 2022."
Mr Perich spoke positively about the future and expects the company's strategy to start bearing fruit soon.
He commented: "The Company is now firmly in the Transform phase of our Reset, Transform and Grow turnaround strategy. As the impact of COVID-19 restrictions ease, and notwithstanding uncertainty created by rising geopolitical risks worldwide, we expect to see a recovery in financial performance across the business, with positive operating cashflows and increasing economies of scale driving earnings improvement."
"With the sale of Speciality Seafood and the resolution of our US litigation, we are fully focused on our two growth engines and have the certainty we need to pursue our ambitions and deliver long-term sustainable growth," Perich concluded.
