Soy milk sales drive Bega’s bumper revenue

Bega Group shares were the star performer on the ASX 200 after it revealed its annual revenue had topped $3bn and it is beginning to reap the benefit of higher prices.

Bega Cheese executive chairman Barry Irvin on his Bega Valley dairy farm. Pictures: Robert Hayson

Hefty Covid-19 costs coupled with supply chain and flooding disruptions outweighed Bega Group’s strong retail sales for the 2022 financial year, pulling annual profit down 69 per cent.

The Australian-owned company – which features brands including Dairy Farmers, Vegemite, Bega Cheese and Yoplait – posted a $24.2m net profit in the 2022 financial year, down from $78.0m in the previous period.

It annual revenue increased 45 per cent to exceed $3.00bn, while its consolidated net debt reduced by $60m to $265m as of June 30.

Investors were heartened by the outlook, sending Bega shares up 11.8 per cent to $4.18 to be Friday’s best performer on the S&P/ASX 200 Index.

Chief executive chief executive Paul van Heerwaarden said Bega Group was well-positioned to manage opportunities and challenges as “volatility and disruption remains in the supply chain”.

“The benefit of increased consumer prices has started to flow through in FY2023 across all channels and product categories with the full impact to be felt in FY2024,” he said.

Bega Group reported growth of 1.4 per cent in its Dairy Farmers, Pura and Masters white milk category and 5.2 per cent across its spreads category, which includes Vegemite and peanut butter

In the first full year of its dairy and drinks segment following the acquisition of Lion Dairy and Drinks in January 2021, Bega Group reported growth in the branded segment of 63 per cent to $2.5bn.

On the supermarket shelves its plant-based milk brand Vitasoy was the standout performer, with category growth up 11.7 per cent, followed by growth of 8.2 per cent in its Zooper Dooper and Berri brands.

Bega posts strong sales in its cheese and dairy and drinks division. Pictured is cheese master Dave Mellor. Picture: Jason Edwards

Bega chairman Barry Irvin said the results were a testament to the “strength of our business” as the Covid-19 pandemic, flooding and associated transport challenges combined to cause disruption.

Bega reported increases in both the commodity and consumer prices for its milk products in FY22 and strong retail sales volume across its brands.

However, benefits were offset by more than $40m in direct costs of due to Covid-19 through investment in PPE and disruptions to the supply chain and inconsistent customer trading.

Bega’s worker absenteeism at times also exceeded 30 per cent during the financial year.

The company declared a final dividend of 5.5c per share, payable on September 23.

The group maintains an earnings guidance of $160m-$190m normalised EBITDA across FY23.

Competition for milk in June and July resulted in the farm gate milk price increasing 30 per cent on FY2022.