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Embattled organics producers Murray River Organics (ASX: MRG) posted its "disappointing" first-half results, with a promise to implement a turnaround plan.
The group, which produces organic fruit products like sultanas, raisins, and currants, reported a net loss after tax of $22.2 million for the six months to December 31, compared to $1.2 million in the prior corresponding period.
The company also reported an EBITDA loss of $16 million, compared to a $1.8 million profit in H1 FY17 however revenue rose from $16.7 million to $39.4 million on the back of acquisitions.
CEO of Murray River Organics, George Haggar, says the results are "disappointing" and the company can do better.
"Financial performance of MRG was disappointing in the first half," says Haggar.
"We are particularly disappointed with the poor margins across the commodity and bulk segments. However, the growth potential for MRG as a leading Australian producer, packer, and seller of organic food products is evident."
"A turnaround plan, which in the first instance focuses on improving processes and systems across the supply chain, will assist in realising the embedded value of our company."
The outlying revenue boost can be attributed to the full six-month contribution of acquisitions of Food Source International (in September 2016) and Australian Organic Holdings (in November 2016).
The group says the earnings dip was because of slower than anticipated efficiencies from the Dandenong manufacturing site and delays in the commissioning of a new processing facility.
Haggar says the company has reviewed the poor performance of the company in the half and says a turnaround is imminent.
"While the initial effort has been to focus on people, process and systems, the business will continue to move through a turnaround and consolidation phase over the coming months," says Haggar.
The improvement plan includes revamping the supply chain and bringing in new equipment to help with processing and packing.
"There is no doubt the primary focus in the short term is to implement a turnaround plan that addresses the 'growing pains' we have clearly felt over the past 18 months," says Haggar.
"Simultaneously, we are very focused on the ultimate prize - the opportunity to play a leadership role globally in the organic health and food sector."
The company listed on the ASX in December 2016. At its peak, shares in Murray River Organics were trading at $1.27, but its price has declined sharply.
Since listing, the entire Murray Organics board has been replaced. In August 2017, co-founder and COO Jamie Nemtsas stood down, as did CEO and MD Erlin Sorensen in November 2017. George Haggar was appointed as the new CEO.
Later that same month, major shareholders called for an EGM to remove chairman Craig Farrow and board members Lisa Hennessy and Ken Carr.
The corporate regulator ASIC issued Murray River Organics a fine of $33,000 in December 2017 for an alleged failure to comply with continuous disclosure obligations, and at the EGM in January 2018, Farrow, Hennessy and Carr were removed from the board and replaced by Andrew Monk, Steven Si and Keith Mentiplay.
At 12pm AEDT shares in Murray River Organics are up 2.56 per cent to $0.40 per share.
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