Bega Cheese profits plummet but revenue tops $3 billion as company announces annual results

Shares of Bega Cheese soared 12% after the company revealed a “milestone” revenue jump and a positive outlook for the year ahead, despite a 69% drop in statutory profits.

The company said 2022 had its challenges, with flooding across large parts of the east coast and COVID continuing to disrupt the supply chain.

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

It is also the company’s first year in business since acquiring Lion Dairy and Drinks.

Executive Chairman Barry Irvin said he was pleased with the result in volatile market conditions.

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

“It’s a pleasing result that comes in what has been one of the most volatile times, I think, in recent history.”

The impacts of COVID continue

Chief Financial Officer Peter Findlay described the $40 million costs the company has associated with supply chain disruptions related to COVID-19.

“As the Omnicom virus spread, absenteeism kind of peaked at around 30%, which puts tremendous pressure on our factories,” he said.

“It cost our branding business primarily about $6 million and we had additional RAT testing of almost $3 million.

“We had closures at this factory with about 7.5 to 8 million dollars where we just couldn’t open factories and had to stop [product] lines.”

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

Rising milk prices benefit the future results of Bega Cheese.(Rural ABC: Brett Worthington)

Positive outlook as food prices rise

Bega Cheese chief executive Paul Van Heerwaarden said the end of milk at $1 a liter had helped restore value to the supermarket’s dairy cabinet.

“This is a cumulative 40% increase in private label milk prices since we acquired the Lion Dairy and Drinks business in January last year,” he said.

“And I would say that’s a really significant development that we’ve seen since the acquisition, which positions us really well.

“The benefit of higher consumer prices began to be felt in fiscal year 2023 across all channels and product categories.”

The company confirmed a profit forecast for FY23 in the range of $160 million to $180 million, with high international commodity prices supporting higher farmgate milk prices.

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