Bega’s latest earnings guidance for FY2023 is $160-$190 million, citing high farm gate prices and strong competition between milk processors.
In a market update in April, Bega said disruptions from Covid, floods, war in Ukraine, and ongoing Covid lockdowns in China, Bega revised its earnings guidance for FY22 to $175-$190 million.
In its latest trading update, the company said some of those disruptions were easing and Bega had been able to pass on the increased business costs through higher wholesale and retail prices or other mitigating measures.
That said, ongoing cost pressures from "robust" competition between dairy processors was ongoing.
It said the farm gate milk price for FY2023 was expected to increase by 15-20 per cent, which was reflected in milk price announcements by the company on 1 June. But since then, particularly strong competition between processors in June and July have seen farm gate prices in Victoria increase by around 30 per cent compared to FY2022.
As a result, Bega expects its FY2023 performance to be impacted and said its guidance for the year will be between $160 million and $190 million.
The company said it expected to recover the higher costs through its range of brands, wide chilled network and mix of Australian and international products.
The Australian Financial Review reported a leaked letter from Bega to dairy farmers caused a number of brokers (UBS, Bell Potter, and Ord Minnett) to downgrade the stock two days later, on 20 June, and Perpetual to sell 1.2 million shares between June 16 and 30.
