Bega Cheese has bumped up full year dividend by 10% despite reporting a sharp fall in profit for the year to June as the cost of what was a massive expansion program hit home.
Final dividend was lifted to 5.5 cents a share from 5 cents previously for a total for the year to June of 11 cents.
Investors eased the shares lower in early trading, but then pushed them higher to end at $7.87, up 2.7% on the day.
Bega bought the Mondelez grocery business, now known as Bega Foods, and the Peanut Company of Australia in separate deal, and has just bought a milk factory in Western Victoria.
The company reported a 79% drop in annual net profit to $28.8 million while earnings before interest, tax depreciation and amortisation (EBITDA) was down 60% to $92 million.
Bega’s revenue rose 17% or $212 million, to $1.44 billion, driven by the contribution from Bega Foods, higher international sales and increased milk intake from suppliers.
Bega said that after stripping out the acquisition costs “normalised EBITDA” of $109.6 million up 55%, with “normalized (sic) profit” after tax of $44 million up 45%.
Executive Chairman Barry Irvin commented: “I am delighted with the strategic progress of the company and very pleased with the sound underlying financial performance and the response to our milk acquisition program in extremely difficult times for our dairy farmer suppliers”.
Earlier this month Bega said it had acquired Saputo Dairy Australia’s Koroit dairy processing facility for $250 million which was on the market as part of the ACCC settlement with Saputo over its takeover of Murray Goulburn.
As part of the acquisition, Bega received a guarantee of 300 million litres of supply from Saputo Dairy Australia until June 2020. The company says it has also significantly increased its capacity in butter, dairy nutritionals and milk powders.
Bega says it has acquired more milk in the region and expects the Koroit facility to process a full year equivalent of 420-450 million litres this year.
