Organic dried fruit manufacturer Murray River Organics went into voluntary administration nine days after its AGM, on 9 February.
Grant Thornton Australia has been appointed voluntary administrators and KPMG as the receiver. KPMG is now in control of MRO's assets, undertakings and operations and assessing its financial position. MRO is operating as business as usual. KPMG said it would start looking for buyers in the coming weeks.
At the AGM, chair Andrew Monk told shareholders the final audited financial reports had not been signed due to the uncertainty of the company's ability to operate and ongoing attempts to recapitalise the business.
“The past year did not got to plan, delivering a number of disappointments across our farms as well as delays to our high margin new branded products rollout.
“We are currently reviewing options that may provide a pathway to profit via an M&A transaction, capital raising and restructure of debt facilities that would reposition and reset the Company for growth and profit,” Monk said.
FY21 was challenging for MRO, off the back of two consecutive tough years due to drought, low yields, and high costs. But on the release of its FY21 results in September 2021, CEO Birol Akdogan said the company saw “significant green shoots” coming from its branded products in retail and export divisions and strong demand for its dried fruits in domestic and export markets.
At the AGM on 31 January, Akdogan said the trading results were disappointing and sales targets had been optimistic. While there was potential for branded products, the launch phase meant low margins due to a heavy reliance on price promotion, which was compounded by lower sales momentum than expected.
IN FY21 it launched 30 new MRO-branded products into muesli, confectionery, and dried fruit and nut categories. MRO said retail branded product sales were up 24 per cent, and the Wholesale and Ingredients strategic procurement business was up 20 per cent.
But the growth in branded products was offset by a 25 per cent decline in a low margin private label contract. Its largest private label contract decreased by $7.5 million and was expected to do the same in FY22.
FY21 snapshot
- Net sales $42.6m, down 11.9%
- Underlying EBITDA -$11.7m, down 13.5%
- NPAT (Loss) -$21.6m, up 44.6%
- Net debt $40.1m
- Net assets -$2.8m
While the FY20 harvest was badly impacted by drought and unseasonal rain events, the FY21 harvest was below expectations in terms of yield but delivered much higher quality fruit. Akdogan said the harvest would be sold in FY22.
Farming operations underperformed with a hail storm wiping out the entire crop from its largest third party property in early 2021, the impacts of which were expected to flow through to FY22 as well at between $4.5-$6 million.
It announced more than $22 million in asset sales across 2021 and its intention to move to a “capital light” alternative.
Monk said the business was looking to accelerate its growth and while work was being done to improve the poor returns on farming and agricultural assets, the company was better placed to focus on expanding its Dandenong food production facility, branded FMCG opportunities, and capitalising on the strong consumer trend to organics and better-for-you products.
The company was looking to FY22 to sell its remaining properties, attract new investments onto the farms in return for long term supply arrangements which would ideally lead to a meaningful increase in yields. It also said it was looking for acquisitions to expedite its growth and return to profitability.
In its FY22 trading update at the AGM, the company said targets were to significantly reduce debt and operating losses. It had sold its Mourquong facility, implemented automation initiatives at the Dandenong site, cut spending, reduced staff and sold underutilised farm assets. It planned to sell its remaining farm assets by April.
At the end of CY21, MRO had more than $2 million cash availability.
At the AGM the company said it had engaged Lion Advisory to help with its capital management and was “in discussions with our major stakeholders and potential new investors with a view to a recapitalisation initiative in the coming months”.
Nine days later MRO called in the administrators.
