Bega Cheese broke through the $3 billion revenue barrier in FY22, but while revenue was up 45 per cent, statutory earnings were down 19 per cent to $149.9 million.
Snapshot
- Revenue: $3bn, up 45%
- Earnings before interest, taxes, depreciation, and amortisation (EBIDTA): $149.9m, down 19%
- Profit after tax (PAT): $24.2m, down 69%
The FY marked the first full year of Bega Dairy and Drinks, which was reflected in the 63 per cent revenue growth to $2.5 billion in the branded segment. It now accounts for 82 per cent of revenue.
The dairy nutritional and ingredients business benefitted from higher commodity sale prices, recording $529 million in revenue. Bulk goods revenue share dropped 9 points to 18 per cent of revenue.
Chair Barry Irvin said the positive performance from the two segments meant Bega could offset the impact of supply chain disruption and “a very disrupted” convenience and food service market.
The direct costs of Covid in FY22 were more than $40 million, with absenteeism sometimes exceeding 30 per cent. While there were significant investments in PPE and additional safety measures, the company also faced extended disruptions in the supply chain of core inputs and interrupted and inconsistent customer trading.
CFO Peter Findlay said the Omicrom variant put major pressure on the company.
“As the Omnicom virus spread, absenteeism peaked at around 30 per cent, which put huge pressure on our factories.
“It cost our branded business about $6 million, and additional RAT testing of close to $3 million,” Findlay said.
Plant shutdowns cost between $7.5-8 million, with entire lines stopped.
Covid challenges also impacted the ability for the company to manage other unplanned events such as the east coast and central Australia flooding events.
Irvin said the Bega Group was focused on finding business efficiencies and cost out programs, benefiting from growth in key brands, a step change in white milk retail pricing and the realisation of higher selling prices.
The company is the country’s market leader in yoghurt, milk-based beverages, and spreads.
CEO Paul van Heerwaarden said: “The benefit of increased consumer prices has started to flow through in FY23 across all channels and product categories with the full impact to be felt in FY24.”
Key achievements for the group were completing the integration of Dairy and Drinks from Lion including the IT transition, leveraging the combined distribution and go-to-market capabilities, and realising milk optimisation through the expanded processing network.
There were significant Covid related costs and supply chain issues from packaging, pallets, and shipping to flooding events.
The group consolidated net debt at $265 million, down from $325 million in FY21 through a $158 million operating cash inflow and improvement in working capital of $73 million.
Its FY23 earnings guidance is for a normalised EBITDA range of $160-190 million and the Victoria farm gate milk price to increase 15 to 20 per cent.
