Bega Group reported a 12 per cent jump in revenue for FY23 to $3.4 billion, but the year was not without its challenges. Chair Barry Irwin suggested “dynamic” as the most appropriate way to describe the period, which was marked by rapidly rising commodity prices, a highly competitive milk procurement market, and a disconnect between the two.
Snapshot
- Revenue: $3.38b, up 12%,
- normalised EBITDA: $160.2m, up 11%;
- statutory EBITDA: $144.1m, up 4%;
- impairment of commodity assets: ($275.9m);
- normalised NPAT: $28.5m; and
- statutory NPAT: ($229.9m).
CFO Gunther Burghardt said the difference in performance by its two business units – bulk and branded goods – was a year of two halves.
CEO Pete Findlay said the situation with milk production was going to continue for some time and drove the decision to right size some of the group’s commodity assets.
Irwin warned its Bulk business was going to struggle in FY24 until its restructuring impacts came into effect in FY25.
Meanwhile, net revenue for the Branded business was up 16 per cent in price and volume and represented 85 per cent of Bega’s revenue.
With a successful price rise campaign in the branded business in 1H, Branded overtook Bulk in EBITDA Margin by Quarter as a percentage of revenue, as the rapid decline in global commodities in 2H hit home.
In what he called a year of “complex, diverse, and rapidly changing circumstances”, Burghardt said that the company managed double digit growth was a reflection on its brand strategy that started five years ago.
Irwin said the company had to be agile in the face of significant challenges, including the need to install significant cost increases into the market.
“Once we did the step change on price, we saw great momentum in the brands,” Irwin said.
CEO Pete Findlay said he was “incredibly pleased” with the team and how the brands performed during the time.
“Being able to grow volume across the branded business by five per cent signifies the resilience of the brands and how they are resonating customers.
“The group’s iconic brands demonstrated their value, building market share and margin momentum in the second half of the financial year following significant farm gate milk price rises and other cost increases in the first quarter of FY2023.
“The execution of price increases, cost out programs and a pipeline of new product development strongly contributed to the Branded segment’s financial performance particularly in the second half,” Findlay said.
The company also completed its restructure, completing the absorption of Dairy & Drinks into Bega. It delivered around $20 million in annualised cost savings but did see 200 roles removed.
