Bega updates earnings guidance, flags big write-downs

by | Jun 28, 2023 | Australia, News

Bega Group announced an expected write-down in the value of bulk dairy ingredient assets of between $180 and $280m given the significant disconnect between farm gate prices and declining globally traded dairy commodity values that has impacted FY23 is expected to continue into FY24. The company says the precise amount of the write down will be determined by the outcomes of its milk procurement program (as yet incomplete) and farmgate pricing for FY2024.

Bega confirmed its guidance that it will be at the low end of the $160m to $190m range for underlying EBITDA in FY23. Bega has accelerated its organisational restructure and business simplification program, which it expects will deliver annualised cost savings of $20m with $12m in savings flagged for FY24. One-off costs of around $20m will be incurred as Bega takes the final steps in the integration of the Lion Dairy and Drinks business acquired in 2020. Three internal divisions are effectively being merged into two, as the group steps up a push into the non-grocery food service channel.

Bega also announced it will sell its Vegemite factory site in Port Melbourne for $115m in a sale and leaseback deal with property funds management group Charter Hall. The leaseback deal is for 15 years with a further 10-year option.