Beston Global Food Company has sharply narrowed its half year loss

Beston Global Food Company’s turnaround program appears to be gaining traction with the company’s first half loss dropping and the revenue outlook for the full year on track.

Beston’s ability to turn milk into profitable goods appears to be improving.

Beston Global Food Company has boosted its revenues by a third and sharply trimmed its first half net loss as the company’s turnaround strategy starts to take hold.

The South Australian dairy company posted a net loss of $2.1m for the first half, down from a $7.8m loss for the previous corresponding period.

Beston’s revenues increased 33 per cent to $90.6m, driven by higher pricing and “much improved product mix performance’’, the company told the ASX. The company said its operating net loss, stripping out one off costs such as those associated with capital raising, was $1.2m.

“Based on the operational and financial performance achieved in the first half ... Beston is pleased to reaffirm its guidance for FY23 (which ... does not take into account any unforeseen cost changes associated with milk supply, milk composition changes, energy costs or other inflationary cost pressures),’’ the company said.

“Revenues are on track to meet the top end (of) annual guidance of approximately $180m.’’

Beston said a $28.2m capital raising in November, $16m of which paid down debt with its banker NAB, had reduced its gearing and enabled it to invest in low-risk, high return projects. The company’s gearing at the end of December sat at 38.4 per cent compared with 69.5 per cent in June 2022.

“Beston has also announced that we are looking to restructure our banking arrangements and intend to undertake an open tender for our debt facilities to ensure that the structure and tenor of these facilities are aligned with our future plans and are fit-for-purpose,,’ the company said.

“The restructure of our banking arrangements is expected to occur over the next three to six months.’’

On the operational front, Beston said the investment in its lactoferrin facilities was paying off, with all of its production for the current financial year contracted and sold at high margins.

“The prices paid for Lactoferrin are strengthening into the second half as customers broaden the usage of this powerful, immune-boosting dairy ingredient, which can be expected to support further margin improvement,’’ the company said.

“We enjoy ... leadership positions in mozzarella supply with some of Australia’s largest food companies and with key partners in strategic international markets, particularly Thailand, Japan, Philippines and China.’’

Beston also said its capital investment program had improved the performance of its Jervois and Murray Bridge facilities and “a further step change in yield and costing performance’’ was expected.

While the company’s dairy division delivered a pre-tax operating profit of $3.2m, the meat division posted a first half pre-tax loss of $1m. Beston shares closed steady at 2.4c.

Originally published as Beston Global Food Company has sharply narrowed its half year loss