Bega Cheese says it has gained market share and margin momentum in the second half of the year following significant cost increases in the first quarter.
For FY23, the dairy company achieved a revenue of $3.4 billion, marking a 12 per cent rise from the previous year. It closed the fiscal year with a net debt of $203.6 million and a reduced leverage ratio of 1.6 times.
Statutory EBITDA (earnings before interest, tax, depreciation, and amortisation) was $144.1 million, with a post-tax loss of $229.9 million significantly impacted by non-cash asset impairment of $230 million.
Meanwhile, normalised EBITDA was $160.2 million, with a profit after tax of $28.5 million.
According to Bega, its strategic decisions in the past five years played a pivotal role this year as it navigated “difficult and rapidly changing” conditions.
The implementation of price adjustments, cost reduction initiatives, and a stream of new products significantly improved the financial performance of the Branded segment, particularly in the latter part of the year.
However, the continued decline of milk production and excess milk manufacturing capacity have created a highly competitive environment and a disconnect between returns from globally treated commodity markets and Australian farm gate milk prices.
Bega said this scenario will continue for some time, resulting in a non-cash impairment and a strategic decision to right-size some of its commodity assets.
Reflecting on the results, executive chairman Barry Irvin emphasised the company’s strategy to shift to a predominantly branded business model.
“The non-cash impairment of our bulk commodity assets reflects industry circumstances and reinforces the importance of our strategy to transform to a predominantly branded business,” said Irvin.
“The right-sizing of our commodity assets and their further integration with our branded business creates a great platform for the support and growth of our brands while maintaining the capability to respond to changing market circumstances.”
Looking ahead, Bega has outlined a restructuring and simplification program to accelerate its transition to an integrated, predominantly branded business.