Bega on sure footing after PCA purchase
DESPITE spending big to buy the Peanut Company of Australia, Bega Cheese's finances are looking good.
In the first half of the 2017/18 financial year the company's earnings before tax, interest and depreciation grew by 46 per cent to $51.7million.
In the company's half yearly report to the Australian Stock Exchange it posted an after tax profit of $20.6 million, up 31 percent on the past year.
Bega Cheese had a gross profit of $133.6million.
This is off the back of the a 14 per cent increase in total revenue to $705million during the same period.
The company increased milk intake by 25 per cent which lead it producing 19 per cent more cream cheese and 33 per cent more mozzarella.
Its share price currently sits $6.68.
In the month after Bega Cheese announced the PCA takeover its share price topped $7.94 before easing after the Christmas break.
This is up from a low of about $2.71 in 2013.
Bega Cheese chairman Barry Irvin is happy with the result.
"The business had performed well particularly when you take into account the significant corporate costs associated with the recent acquisitions and the highly competitive environment the business is operating in,” he said.
Along with buying PCA, Bega Cheese also finalised its purchase of the Vegemite and Zoosh brands and transitioned Kraft Peanut Butter into Bega Peanut Butter.
There is a significant cost associated with branding and marketing of these lines but buying PCA will allow the company to provide its customers with a greater understand of where their food comes from and develop a closer relationship with farmers.
It bought PCA at a cost of $0.83 per share, totalling $11.9million.
The PCA site has processed about 17,000 tonnes of peanuts since 2015.
Despite this volume amounting to between 60-80 per cent of Australia's peanuts it only satisfies about 40 per cent of our annual consumption.
For this reason Bega aims to increase domestic production so that it can market its peanut butter as made entirely of Australian products.
Mr Irvin said he did not expect the high milk intake to continue through the remainder of the 2017/18 financial year.
He put the expectation down to a seasonal reduction in overall milk production through autumn and into winter.
Bega Cheese aims to double its earnings before tax, interest and depreciation to $105-115 million. Mr Irvin said this will take some time as their are number of assess the company is looking to buy.