Dairy News

Bega profit slump

By Geoff Adams

Bega Cheese has taken a huge hit to their bottom line, with profits almost halving in the first half of the 2018/19 financial year as a result of the poor season and the purchase of Saputo’s Koroit factory.
The figures, which were revealed in the company’s half yearly results, are a result of milk price and milk volumes in some regions, slower first half sales in nutritionals, a significant build in inventory and costs associated with the acquisition of their Koroit milk plant and corporate costs, the company says.
Despite revenue increasing by six per cent to $650 million, a result of increase milk volume because of the Koroit factory acquisition, profit after tax was still slashed by 48 per cent to $18.9 million.
‘‘While the first half has been challenging and the business is impacted by acquisition and corporate costs, sales timing and milk support pressure, our strategic focus remains robust and the positioning of the business strong,’’ executive chairman Barry Irvin told investors last Wednesday.
‘‘As is always the case we believe it is appropriate to review the business from a normalised perspective.’’
The company is projecting an overall milk intake of 1 to 1.1 billion litres in 2018/19, following a ‘‘record milk intake’’ of 641 million litres in the first half of the financial year, an increase of 55 per cent on the year prior.
A record 645 million litres was processed in the first half of the financial year, according to the company, up 41 per cent and 189 million litres on the previous year.
However, milk intake from direct suppliers to Tatura Milk totalled 223 million litres, a decrease of six per cent, while milk intake from third parties reduced by 40 per cent to 223 million litres as a result of drought.