Bega Cheese has generated statutory earnings before interest, tax, depreciation and amortisation (EBITDA) of $65.8 million, an increase on the prior comparative period (pcp) of $26.5 million. Its half-year reported profit after tax (PAT) was $21.7 million, increasing 154 per cent ($13.2 million) on the pcp.
Snapshot
- Statutory EBITDA increased 68 per cent to $65.8 million
- Normalised EBITDA increased by 51 per cent to $73 million - this was up on the comparative period by $24.5 million or 41 per cent after adjusting for costs related to the acquisition of LD&D and legal costs relating to ongoing litigation with Kraft Heinz and Fonterra.
- Continued focus on working capital - decreased 5 per cent to $168.3 million
- Net debt pre capital raise decreased by 21 per cent to $247.5 million.
Its normalised EBITDA was $73 million, a 51 per cent increase on pcp after adjusting for costs related to the Lion Dairy & Drinks (LD&D) acquisition and legal costs relating to ongoing litigation with Kraft Heinz and Fonterra.
Revenue declined 4.5 per cent due to milk supply guarantee arrangements ending at Koroit, ongoing competition for milk resulting in decreased volumes, a reduction in global commodity prices, currency appreciation and exiting lower value contract cheese manufacturing.
Chair Barry Irvin told the investor call they were pleased with the performance. He said the company remained stable during COVID-19 and while they were large impacts on the global markets, there were aspects of the business that did “very well”.
The strong first half financial result benefited from the lactoferrin plant at Koroit being commissioned and coming into full operation.
CFO Peter Findlay said the first half performance would not reflect the full year performance. Around 80 per cent of income fall in the first half and 20 per cent in the second, mainly due to seasonal impacts of milk supply and seasonality in the product uptake, he said.
CEO Paul van Heerwaarden said there was pleasing growth in consumer brands’ performance as well as the addition of Lion Dairy & Drinks (LD&D), which came onboard at the beginning of this year.
Highlights
- spreads category growth of 9.4 per cent for the six months to December;
- growth of 13.6 per cent and a market share increased 30.9 per cent in the spreads market;
- Bega Simply Nuts doubled market share to 21 per cent;
- B honey has grown 11.4 per cent share in Coles after six months in the market;
- launched Vegemite squeeze for new usage occasions and to increase consumption; and
- export revenue increased 14 per cent to $270 million.
There was some good recovery occurring in food service businesses in China, Asia and Middle East. While there had been a large slowdown in Japan the company was making it up in other markets. van Heerwaarden said that flexibility held the company in good stead.
Reckitt Benckiser have advised they will exit the Derrimut nutritional canning facility, five years earlier than its contract. Bega is considering the implications but said the service contracts include compensation payouts to Bega for loss of future earnings.
