Dairy processor Bega Cheese expects continued revenue growth and improved financial performance in the 2017 financial year, after more than doubling its 2016 annual profit.
Bega’s net profit of $28.8 million for the 12 months to June 30 is up 132 per cent on last year’s $12.4 million.
Normalised profit, which excludes the impact of significant events, rose 33 per cent to $29.2 million.
Strong sales growth and cost cuts helped boost the bottom line despite oversupply in the broad market and strong competition.
“We expect continued revenue growth and improved financial performance in FY2017 (the 2017 financial year),” executive chairman Barry Irvin said on Wednesday.
“Bega Cheese continues to maintain a strong balance sheet, and the company is well positioned to grow its business both organically and through acquisition.”
Also, Bega announced that chief executive Aidan Coleman will retire in January 2017.
The company said it was well advanced in the recruitment process for a replacement.
Bega Cheese produced 238,000 tonnes of dairy products in 2016 – up six per cent on last year.
Bega said that significant increases in global dairy production, softening demand in China, Russian sanctions on dairy imports from western countries, and a highly competitive Australian market had created a very challenging operating environment for dairy companies and farmers in 2016.
The challenging circumstances became tumultuous when two large dairy companies – Murray Goulburn and Fonterra – announced retrospective cuts to the price they pay dairy farmers for their milk.
“Bega Cheese’s strategy of consistent and controlled investment in infrastructure and capacity is demonstrated in the stability of our business and our ability to respond to volatile market circumstances,” Mr Irvin said.
Shares in Bega were 18 cents higher at $6.44 at 1007 AEST.
