One of Australia’s biggest dairy companies has posted a bumper profit and guidance upgrade, as it cuts back on headcount while ramping up product output.
Bega's cash earnings grew 14 per cent in the six months to December to $124.7 million, while its bottom-line profit jumped by more than 50 per cent to $46.9 million.
Net revenue rose five per cent to $1.9 billion, with earnings per share up 56 per cent to 15.4 cents.
Executive chair Barry Irvin said he was “incredibly proud” of the company’s effort.
“A lot of our factories were built 20 years ago, and so to ensure that we were able to to move with those trends, the team have done a huge amount of work and moved very quickly,” Mr Irvin told shareholders.
“I couldn’t be more pleased with the alignment across our organisation to make that happen, and just incredibly, incredibly proud of the effort that our team did to pivot quickly.”
Bega declared a seven cent per share interim dividend for shareholders, up 17 per cent on the equivalent half.
Bega has decided to close the Strathmerton factory and transfer its operations to the home base in the Bega Valley. The closure was one part of a rationalising of operations that will see 300 people leave the company.
The strong performance followed sustained demand for its brands, which include Vegemite, Dare, Dairy Farmers milk and Yoplait.
The results came roughly halfway through the dairy group's five-year transformation plan, which is aimed at cutting costs by consolidating manufacturing and logistics.
"When we started our strategy, we had about 4300 full-time equivalents and we’ll end the year at 3400," chief executive Pete Findlay told shareholders at an earnings briefing.
“And yet we’re producing more product in a more targeted way that we think is actually more relevant to our consumers.”
Under the transformation plan, Bega is targeting $250 million in pre-tax earnings by 2028.
Bega has cut its logistics networks from roughly 100 sites to about 75, and in October announced the closure of a Victorian cheese factory in Strathmerton and a Queensland peanut business.
“We will separate 300 people from the business, which has been difficult, but we’re managing that as best we can,” Mr Findlay said.
“And we’ll obviously be paying a significant amount of one-off costs to make those people redundant.”
Bega lifted its full-year cash earnings guidance range to between $222 million and $227 million, and reduced its leverage ratio to 1.2 per cent from 1.3 per cent.
The strong interim result was well received by investors, who sent shares 2.1 per cent higher to $6.20 after an initial spike to $6.37, its highest price since May 2021.
Looking ahead, Bega touted its new product pipeline and flagged an increase in capital expenditure to support its next phase of growth.
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