TasFoods Faces Debt and Market Risks Despite Asset Sales
TasFoods reports a 13.2% revenue decline in Q3 2025 driven by oversupply and discounting in the Tasmanian poultry market, while advancing a $2 million sale of Pyengana Dairy and reducing debt through property sales.
- 13.2% total revenue decline due to mainland poultry oversupply
- Sale agreement signed for Pyengana Dairy at $2 million
- Settlement of Betta Milk property used to reduce term debt
- Cost management leads to 5.6% reduction in indirect costs
- Q3 cash flow impacted with $1.3 million overdraft and $0.2 million net operating outflow
Challenging Market Conditions
TasFoods Limited (ASX – TFL) has reported a difficult third quarter for 2025, with total revenue falling 13.2% compared to the prior corresponding period. The primary driver behind this decline is an ongoing oversupply of lower-cost poultry products from mainland Australia flooding the Tasmanian market, intensifying competition and forcing wholesale prices down. This dynamic has particularly impacted the poultry division, where revenue dropped 14.2%, reflecting both lower sales volumes and reduced prices.
Strategic Asset Sales and Debt Reduction
In a bid to strengthen its financial position, TasFoods has signed a business sale agreement for Pyengana Dairy valued at $2 million, comprising $1.7 million in cash and $0.3 million in shares of AgFood within TasFoods. The company anticipates holding an Extraordinary General Meeting in late November to approve this transaction, with settlement expected shortly thereafter. Additionally, TasFoods completed the settlement of the Betta Milk property in Burnie during September, using the proceeds to pay down term debt, signaling a clear focus on deleveraging.
Cost Management Amidst Revenue Pressures
Despite the revenue headwinds, TasFoods has implemented effective cost control measures. Indirect costs across the company decreased by 5.6% year-on-year, and corporate office expenses were trimmed by $0.1 million through lean operations focusing only on essential services. These efforts have helped mitigate some of the financial strain caused by the challenging poultry market environment.
Operational Adjustments and Market Outlook
The company’s poultry division has strategically reduced exposure to non-profitable product lines and market channels, particularly where delivery and fixed costs render operations unsustainable. While this has contributed to lower sales volumes, it reflects a disciplined approach to preserving margins. Meanwhile, Pyengana Dairy’s cheese sales continue to perform well, expanding into 25 new Coles stores nationally, underscoring the brand’s resilience.
Looking ahead, TasFoods expects the oversupply and heavy discounting of poultry products to persist through the fourth quarter of 2025 and into 2026. The company highlights ongoing pressures from rising labour, logistics, and input costs, alongside subdued consumer spending and economic uncertainty, which collectively weigh on both business and consumer confidence.
Capital Management and Shareholder Focus
Under its Capital Management Framework, TasFoods remains committed to evaluating all business operations and assets to enhance shareholder returns. The company sees potential in its Nichols Poultry and Isle & Sky brands and continues to explore opportunities to unlock value from these assets amid the challenging market backdrop.
Bottom Line?
TasFoods’ strategic asset sales and cost discipline aim to weather ongoing poultry market pressures, but sustained oversupply and pricing challenges loom.
Questions in the middle?
- Will the Pyengana Dairy sale proceed smoothly post-EGM and what impact will it have on cash flow?
- How will TasFoods balance operational cuts with growth opportunities in its poultry and cheese divisions?
- What strategies might TasFoods deploy to counter continued mainland poultry oversupply in 2026?
