The cereal arm of freedom Foods hopes to follow in the footsteps of Pactum Dairy and form a partnership in Asia to boost exports of its allergen-free cereal.
Freedom posted an 11.6 per cent slide in net profit to $12.1 million in the 12 months to June 30, Business Day reports.
Managing director Rory Macleod attributed the decline to booking a pre-tax profit of $11.8 million the year before from reducing its stake in a2 Milk from 25 to 17.9 per cent.
While Freedom's profit eased, its net sales grew 5.97 per cent to $104.6 million. Investors warmed to the result, the company's shares jumping 2.8 per cent to close at $3.25.
Mr Macleod expected more sales growth in the next two years as it increases exports in the US and Asia, but he said he didn't want to rush the expansion.
“We want to be quite thoughtful about what we'll do,” Macleod said. “You have to be very careful about what products you are going to take up there and sell.”
Macleod said working with a Chinese company was therefore more preferable than relying on distributors.
“In China it's about partnerships collaboration, which we prefer to do and we enjoy because it's about value-adding on the products and ideas' side, and your partner taking it to market and dealing with consumers.
“We have got a couple of groups that we have in mind but it is a little way off.”
Macleod expects the company will be able to ramp up cereal exports to Asia later next year or in early 2016.
The focus on cereals comes five months after Freedom and Bright Foods struck a UHT supply deal, which is worth about $40 million.
The long-life milk is produced at its Shepparton factory, which achieved its five-year target of processing 100 million litres of milk within a few months of operation.
Mr Macleod said the strong growth at Pactum would not only lead to increase sales and profitability – with more opportunities in private label and domestic branded products – but also help strengthen its links with Asia.
“The investment in Pactum Dairy Group provides a material opportunity to increase exposure to the growing demand for high quality and safe dairy products from South East Asia, including China.
“We see that as an opportunity to leverage Freedom's uniqueness and capability.”