It has more than doubled its profit performance compared to the same period last year, but revenue declined by 4.5 per cent, due to the end of a milk supply guarantee arrangement at Koroit, competition for milk supply, global commodity prices and the Australian currency appreciation.
In the half-yearly report announced on February 24, Bega Cheese reported earnings before interest, tax, depreciation and amortisation of $65 million.
Receipts from customers fell from $867 million to $787 million.
The company pointed to growth in the Australian and international branded business, high value nutritional powders and lactoferrin sales.
A significant development during the half-year was the announcement of the acquisition of Lion Dairy & Drinks division for $534 million.
The acquisition was completed in January, so the full impact on finances will not be known until the full financial year report.
Although total milk processed was up by more than 1.6 per cent, Bega has found the direct milk supply competitive, particularly in northern Victoria.
Direct milk intake decreased following the cessation of the Saputo milk supply guarantee at Koroit.
The first half-year report found seasonal conditions were positive and improved conditions provided some relief for dairy suppliers recovering from the impacts of drought.
“Our dairy suppliers benefitted from improved rainfall and growing conditions that have resulted in lower prices for farm inputs, including feed, fodder and water,” the report noted.
“The seasonal outlook for growing conditions remains positive for the second half of financial year 2021.”
The Bega group completed a capital raising of $400 million during the first half-year.
Bega is waiting to hear the outcome of a court case involving Fonterra and the use of Bega trademarks in Australia for cheese and butter.
Fonterra took legal action in 2017 to restrict Bega's use of the trademarks and Bega has opposed Fonterra's position.
A judgment from the Victorian Supreme Court is expected soon.
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