Bega Cheese profits fall, but revenue rises to $3 billion as company announces full-year results

Shares of Bega Cheese have soared 12 per cent after the company revealed a “milestone” revenue jump and a positive outlook for next year, despite a 69 per cent drop in statutory earnings.

The company said 2022 had had its challenges, with flooding across much of the East Coast and COVID continuing to disrupt the supply chain.

The COVID-19 disruption has cost the company $40 million.

It is also the company’s first year of operations since it acquired Lion Dairy and Drinks.

Chief Executive Barry Irvin said he was pleased with the result amid volatile market conditions.

“This is the first time the company has surpassed $3 billion in revenue, which is obviously a milestone for the organization and a testament to the growth and acquisitions the company has made over the last decade,” Irvin said.

“It’s a nice result coming in what has been one of the most volatile periods, I think, in recent history.”

COVID impacts continue

Chief Financial Officer Peter Findlay outlined $40 million in costs the company associated with supply chain disruptions from COVID-19.

“As the Omnicom virus spread, absenteeism has peaked at around 30 percent, putting a huge strain on our factories,” he said.

“It mainly cost our brand business around $6 million and we had additional RAT testing close to $3 million.

“We had closures at that plant with about $7.5 to $8 million where we just couldn’t open plants and we actually had to stop [product] lines.”

The company posted EBITDA of $149.9 million and $24.2 million of statutory profit after tax, down 69 percent from last year.

milk on supermarket shelves
The increase in milk prices is benefiting Bega Cheese’s future results.(Rural ABC: Brett Worthington)

Positive outlook as food prices rise

Bega Cheese Chief Executive Paul Van Heerwaarden said the end of $1 a liter for milk had sent value back into the supermarket’s dairy cabinet.

“That’s a 40 percent cumulative increase in private-label milk prices since we acquired the Lion Dairy and Drinks business in January of last year,” he said.

“And I would say this is a really important development that we’ve seen since the acquisition, that really positions us well.

“The benefit of rising consumer prices began to flow in fiscal 2023 across all channels and product categories.”

The company confirmed FY23 earnings guidance in the $160-$180 million range with strong international commodity prices supporting higher farm-gate milk prices.

Irvin also disclosed that Bega Cheese Limited would undertake a corporate rebranding as Bega Group to reflect its acquisition of branded food and beverage businesses.

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