Cost Cuts and Acquisition Drive Forbidden Foods Toward 2025 Cash Flow Break-Even
Forbidden Foods Limited has more than doubled its group revenues in Q2 FY25 following the acquisition of Oat Milk Goodness, driven by expanded retail distribution and strong ecommerce growth.
- Group revenues surged 104% quarter-on-quarter to $1.17 million
- Cash receipts increased 55% from the previous quarter, reaching $1.16 million
- New product ranging agreements secured with Woolworths and Ampol Foodary
- Ecommerce sales for Blue Dinosaur nearly doubled, up 94% on prior year
- Company targets cash flow break-even in calendar year 2025
Strategic Acquisition Spurs Revenue Growth
Forbidden Foods Limited (ASX: FFF) has reported a significant uplift in its financial performance for the quarter ended 31 December 2024, marking its first full quarter operating as a multi-brand entity following the acquisition of Oat Milk Goodness (OMG). The acquisition has expanded the company's footprint in the fast-growing better-for-you FMCG sector, particularly in the oat milk and protein product categories.
Group revenues more than doubled to $1.17 million, a 104% increase from the previous quarter and a 77% rise compared to the prior corresponding period. This growth was underpinned by a 55% increase in cash receipts to $1.16 million, reflecting strong customer demand and improved operational execution.
Expanded Distribution and Ecommerce Momentum
Key to this performance was the successful integration of OMG's product range, including the launch of the Coffee PrOATein ready-to-drink SKU, which secured placement in 130 Ampol Foodary stores nationwide and 456 Woolworths supermarkets and metro stores. These agreements complement existing OMG products already stocked by Woolworths, broadening Forbidden Foods' retail presence significantly.
Alongside physical retail expansion, Forbidden Foods saw ecommerce sales for its Blue Dinosaur brand surge by 94% year-on-year to $383,000. The company also recorded its largest single-day online sales during the Black Friday promotion, highlighting the growing importance of digital channels in its multi-channel strategy.
Operational Efficiencies and Cost Management
Post-acquisition, Forbidden Foods has implemented several cost-reduction initiatives, including consolidating distribution centers and streamlining administrative processes. These measures have enabled the company to grow revenues from a lower cost base, resulting in an 80% improvement in net operating cash outflows compared to the prior year quarter.
The resignation of the North America CEO and further staff cost reductions are expected to enhance operational efficiency in the coming quarter. The company is focused on leveraging economies of scale to drive sustainable cash flow generation.
Looking Ahead: Growth and Cash Flow Targets
Forbidden Foods is actively pursuing additional product-ranging agreements, with discussions well advanced with several counterparties. Strategic marketing partnerships, including a sponsorship deal with the Melbourne Mavericks netball team and brand ambassador Eleanor Cardwell, aim to boost brand awareness in the health and fitness market segments.
The company has also extended its secured debt facility with Moneytech, providing access to $1.25 million in working capital to support ongoing growth initiatives. With these developments, Forbidden Foods is targeting cash flow break-even within calendar year 2025, a critical milestone for its multi-brand growth strategy.
Bottom Line?
Forbidden Foods’ multi-brand strategy is gaining traction, but execution of new product launches and distribution deals will be key to sustaining momentum and achieving cash flow break-even.
Questions in the middle?
- How will Forbidden Foods manage competitive pressures in the rapidly evolving better-for-you FMCG market?
- What impact will the North America CEO’s departure have on international expansion plans?
- Can the company maintain its ecommerce growth trajectory alongside expanding physical retail distribution?
