SYDNEY: Murray River Organics Group Limited (MRG) has secured two new contracts with a major Australian supermarket retailer worth approximately $15 million over two years.

MRG has been focused on growing its relationships in the Australian retail market and this new deal is a key milestone in achieving the new strategy launched in 2019. MRG’s scale and global sourcing capabilities have been the foundation for these new contracts. This builds on the MRO branded ranging announced in February 2020 for 8 new products with another major Australian supermarket retailer, which is expected to generate $5 million to $6 million per annum. The products are expected to be on shelf from 1 June 2020.

MRG Chief Executive Officer, Valentina Tripp said, “We have been building our relationships through extensive collaboration, numerous site visits and engagement with our growers, as well as joint planning with our retail customers over the last nine months. We are delighted that the program is delivering and enabling us to secure material contracts going into FY21.”

MRG is actively assessing the situation in relation to COVID-19 and its wider impact on the Company’s operations. MRG has experienced delays to shipping and orders in February and March and anticipates this to continue for the foreseeable future.

MRG has implemented preventative measures to reduce risks to its people and operations at all sites including social distancing, limiting visitors to sites unless critical to operations, meetings using technology and remote working where possible.

MRG will continue to inform the market of any material updates as the situation unfolds, however there is significant uncertainty as to the impacts of these recent unprecedented events on MRG’s export and fresh programs as well as import supply chain delays.

Given the current uncertainty about the impact of COVID-19 on the Company’s operations, it is not possible for the Company to reliably quantify the potential impact on MRG’s financial performance. However,the Company will continue to closely monitor its expected financial performance against the EBITDA-S guidance provided in August 2019andwill keep the market informed of any material updates as soon as more information is available.

The priority during this period of uncertainty is to maintain MRG’s current balance sheet strength and position. MRG presently has a strong balance sheet, following the successful capital raising undertaken earlier this year.

The Executive Team and Board are optimising the business for long-term growth by carefully managing the allocation of capital during this period. The Company is also implementing further cost reduction and cash management initiatives building on significant farm restructuring activities in December 2019 with the exit of the Colignan farm lease reducing cash needs by over $10 million, a freeze on all non-urgent capital expenditure, and the recent exit of the South Park Drive warehouse facility and move to a variable 3PL model in Dandenong.

These initiatives build on the cost reductions already achieved in operations in FY19 through Project Muscat.