Bega Cheese ultimately finished flat on Friday after the company announced its full-year results for FY21. It was a year in which it completed a transformational acquisition that expanded its branded foods portfolio, increased its market share in growth categories and added significantly to its consumer goods supply chain and organisational capability.
Bega generated earnings before interest, depreciation and tax of $141.7 million for the year, 38% higher than FY20 and sales revenue of $2.07 billion.
The $528 million acquisition of Lion Dairy and Drinks, saw the company more than double in size in terms of both annualised revenue to approximately $3.0 billion, and employees to over 4,000, expand its cold chain distribution network to now be one of the largest in the country, and significantly increase its proportion of sales from branded products from 59% to in excess of 80%.
Bega credited its strong farm gate relationships along with the flexibility of a globally competitive supply chain helped navigate fluctuations in demand for products and a competitive market for milk supply.
In addition to the acquisition of Lion Dairy and Drinks, Bega completed and implemented the recommendations of an operational review, successfully concluded two long-running legal disputes, responded to the termination of service and access arrangements at the nutritional powder and canning facility in Derrimut and expanded its branded product offering in growth categories with new product launches.
There was a softening in demand for infant formula during the year due to changes in the Chinese market created by shifts in customer preferences and a weakened Diagou channel. This drop in demand was recognised by the business and mitigating initiatives have been implemented to reduce the financial impact whilst still retaining the capability to service customers in the future.
Following the year of transformational change, Bega said it will continue to focus on unlocking value through the growth of the combined complementary portfolios of branded products in domestic and export markets, by achieving costs synergy benefits from the Lion Dairy and Drinks acquisition in the year ahead, and carefully manage the supply of milk which is set to remain competitive through FY22.
Reflecting on the result, Executive Chairman Barry Irvin said “The importance of consistent strategy and strong values is never more evident than in times of uncertainty. Our capacity to be agile and change, while remaining confident in the core direction and strategy was again tested and on display in FY2021 as we executed the acquisition of Lion Dairy and Drinks. We continue to adapt our business to operate in a COVID-19 safe manner and respond to changing customer and supplier requirements.”