Bega Cheese reported a 79% increase in normalised EBIT to $48m after group revenues dipped 4.5% to $708m. Bega’s balance sheet improved, reducing gearing and moving to a net cash position. Bega reported growth in its spreads category (with the surge in grocery sales due to movement restrictions), while export revenues also increased 14%. Production increased 1.5% and milk processed was 1.6% higher, but direct farm milk intakes decreased with the expiry of the milk supply agreement with Saputo for the Koroit plant and the effects of strong competition in northern Victoria.
Bega completed the purchase of Lion in January and future releases to the ASX will look quite different. Bega says it is well on the way to achieving its synergy targets for FY2022 ($41m per annum) to add to the proforma Lion EBITDA of $56m. The report advised Reckitt Benckiser would be exiting the Derrimut nutritional canning facility, and that opportunities are being canvassed for the capacity.
Meanwhile Bega Cheese lifted its milk price by $0.10kgMS for its Victorian, SE South Australian and Bega Valley Central suppliers. In southern Victoria and SE South Australia, Bega suppliers’ announced milk price is lifted to $6.50kgMS, while northern Victorian milk price hits $6.65kgMS and $7.60kgMS for suppliers in the Bega Valley. The increases do not apply to Bega’s new Dairy and Drinks and DFMC suppliers.
Bega chairman Barry Irwin said the company will continue to review its farmgate milk price and will communicate changes to new milk supply and milk pricing arrangements in the months leading up to the new season.