Beston’s rosy outlook dries up on whey price fall

Beston Global Food Company says cost increases and commodity price falls have led to a significant earnings downgrade.

Roger Sexton is the chairman of Beston Global Food Company.

Beston Global Food Company shares hit a record low late last week after the company told shareholders its earnings for the full year might be as low as zero.

The Adelaide-based cheese and meat producer said in late February, while announcing its first half results, that it was expected a full year EBITDA result of $8m-10m.

This followed the company posting $3m in EBITDA for the first half. However Beston on Friday told the ASX its earnings before interest and tax were now expected to be in the $0-$2m range.

The company’s shares traded as low as 1.3c on Friday and on Monday were changing hands for 1.6c, valuing the company at less than $40m.

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Beston raised $28.2m in November at 2.5c a share, with $16m going towards paying down debt with its banker NAB and much of the remainder to be put towards low-risk, high-return capital projects.

The company said on February 28 that revenue was on track to hit the top end of guidance, at about $180m, and reaffirmed its earnings outlook.

It now says that “unprecedented inflationary pressures” and a rapid and significant decline in whey protein prices internationally had led to the downgrade.

The company upgraded its revenue outlook from $150m-$180m for the full year to $170m-$190m.

Beston said it had been hit with a 300 per cent increase in gas prices after coming out of contract with its supplier, massive insurance cost increases, and a possibly lower milk intake in the fourth quarter than expected. It said whey prices had dropped by 20 per cent in the past month due to increased global competition.

The company said it had taken a number of actions to mitigate the impacts, and to date, $28m in additional costs had been absorbed and offset.

“The underlying performance of the business remains solid, as shown in the revenue, milk supply, production and revenue per litre measures in the revised guidance, the company said.

Beston is yet to post a full year profit since listing on the ASX in late 2015.