Bega cheese has “dynamic year” and future to focus on competitive advantages
Bega Cheese’s CEO Aidan Coleman told the annual general meeting of the company today that the past financial year had been “the most dynamic year” in the company’s 113 year history. Highlights from the year had included being listed as a public company on the ASX, entering into a landmark 5-year supply with Coles and fully merging with Tatura Milk Industries.
Financial overview
In reviewing the 2012 year, Executive Chairman Barry Irvin said it was noteworthy that while sales revenues were stable at $927 Million, profit before tax increased markedly by 23 per cent to $27 Million.
A marginal decrease in sales of 0.5 per cent was insignificant in light of the switch of a large percentage of cheese previously reaching the commodity market, now being diverted into a more profitable inventory maturing for Coles.
Production growth
Mr Irvin said that 2012 had been a historic year for Bega from a production perspective, as total output exceeded a historic 200,000 tonnes. Infant formula and dairy nutritional sectors grew ten per cent in output, to 18,200 tonnes during the same period.
Growth returns from recent investments
Bega Cheese’s CEO said that its Australian customer base had seen overall growth in profitability because of increased sales to buyer brands owned by Fonterra, Kraft and Coles. Exports also grew for sales to Japan, China and South-East Asia. Notwithstanding other international returns impacted by the high Australian dollar, Bega Cheese said that international demand continued for its cream cheese, processed cheese and nutritional powders.
The Bega Cheese annual meeting also heard that in Australia’s competitive retail dairy sector, Bega Cheese had grown its value share from 13.2 per cent in June 2011 to 14.5 per cent in June 2012, and the total category grew 1.5 per cent in the year. Bega said that growth followed a $58 Million investment to “meet the changing needs of the consumer base.”
Other investments had included $4 Million in shares in Warrnambool Cheese and Butter Limited and a $28 Million investment in the development of property and new equipment. Bega said the expansion of cream cheese production at Tatura will lift production by 40 per cent. Due to growing Asian demand, it is expected to be completed earlier than expected.
Future outlook for Bega Cheese
Mr Coleman said that Bega Cheese would continue its focus on its competitive advantages in pediatric and child nutrition dairy products, cheedar cheese manufacturing, processing and packaging, and cream products and cream cheese in the coming year.
“Our objective is to optimise the value created from existing components of milk that are supplied to the company as opposed to actively seeking to grow overall milk processing volumes,” Mr Coleman said.
Mr Coleman said that the strategy to focus on competitive advantages in specific products would place them in the best position to take advantage of increasing opportunities in the Asian region, as well as remaining a leading provider for consumer cheese packaging in the domestic market.
