Bega Cheese has cut its full-year earnings guidance after the drought and exit of many farmers from the dairy market led to competitive pressure which it says ``has never been stronger''.
The dairy processor, on August 2, said it increased its milk intake for the 12 months to June 30 by 41 per cent to a record 1.06 billion litres, in a market that shrank by 733 million litres.
Bega said it had incurred extra costs in the past financial year, with more to come in 2019-20 as it pursues greater production and logistics efficiency.
Bega now expects normalised earnings before interest, tax, amortisation and depreciation of between $113 million and $117 million, compared with the $123 million to $130 million forecast at its half-year results announcement.
``There has ... been greater competitive pressure from processors and this pressure has never been stronger than in the last quarter of 2018-19 and in setting the 2019-20 milk price," Bega Cheese said.
Bega has also been seeking to diversify beyond dairy, most notably through 2017's purchase of a suite of products that included Vegemite.
Bega shares were valued at $4.43 before the start of trade on August 2, down 46 per cent since October 2017.
Last year Bega Cheese's profits took a hit as a result of the poor season and the purchase of Saputo's Koroit factory.