Bega Cheese result “very positive”, despite reporting profit drop

Posted by AFN Staff Writers on 18th February 2015
Bega Cheese result “very positive”, despite reporting profit drop
Bega Cheese result “very positive”, despite reporting profit drop

Australian dairy manufacturer Bega Cheese has announced an 8 per cent increase in revenue to $552.5 million for the first half of the 2015 financial year, despite its normalised EBITA of $31.3 million being lower than the previous year.

Australian Food News reported in August 2014 that Bega Cheese had announced a record profit for the year ended 30 June 2014, saying that its balance sheet had been “significantly strengthened” by the outcome of the sale of its 18.8 per cent share in dairy company Warrnambool Cheese and Butter (WCB).

The Company said it remained “very positive” about the outlook for dairy and for the Bega Cheese business in particular, despite the short term challenges in the first half. It said that the increase in revenue reflected the success of its strategic initiatives and the strong growth of both its international consumer packaged goods business and the nutritional business.

Global dairy price impact

Bega Cheese said global dairy commodity price reductions of approximately 50 per cent particularly impacted the Company’s wholly owned subsidiary Tatura Milk Industries Limited first half result.

The Company reported that commissioning costs of the new infant formula blending and canning plant at Derrimut in Victoria also impacted first half results. Bega Cheese said volumes through the new Derrimut facility continued to grow and projected efficiency levels and costs were now being achieved.

Strategy to grow milk supply to support growth in value added platforms

The Company said it continued to invest in the Milk Sustainability and Growth Program with over 90 per cent of milk supplied by farms now contracted under this initiative and generating significant on-farm investment in future milk supply, including targeted growth projects with an objective of increasing milk supply by 20 per cent.

Bega Cheese said the strong growth in the value added platforms of the business and the successful outcomes of the Company’s Milk Sustainability and Growth Program sees its business in a “excellent position” to take advantage of ongoing strong demand and growth in its key platforms both internationally and domestically.


In October 2014, the Company provided guidance that the normalised full year result for the 2015 financial year would be in line with the 2014 financial year result of $29.7 million. Bega Cheese has updated its forecast normalised full year result for the 2015 financial year to between $25 million and $28 million.

Bega Cheese said the outlook for dairy commodities continues to be positive in the long term due to the global demand for dairy. The Company said that although there were positive signs of improved prices for global dairy commodities and improved currency relativity, in the short term downward pressures would continue to impact commodity sales and margins.

The Company said it was “well placed to meet these challenges through focus on products with stronger margins and the flexibility of the supply chain to change production patterns accordingly”.


Bega Cheese said its strategy continued to be a focus on creating value for its customers, suppliers and shareholders, optimising returns from milk solids, “safeguarding and energising” the workforce and continuing long term support and engagement with the communities in which the Company operates.

Barry Irvine, Bega Cheese Executive Chairman, said there were a number of organic growth opportunities for the business, including further value adding of its whey streams, increased international demand for its existing processed cheese capacity and continued growth in high value dairy nutritionals.

“The Group continues to leverage off its competitive advantages in nutritional food products, FMCG cheese packaging, cream cheese and its core dairy manufacturing network,” Mr Irvine said. “The Group is also investing in infrastructure and skills within the business to ensure Bega Cheese Group is the dairy company of choice for customers, staff, suppliers and investors,” he said.