Bega Cheese has reported a 59 per cent drop in full-year profit to $11.8 million, after a “challenging” year in the Australian dairy industry.
The dairy producer said investments in infrastructure, acquisition costs related to the Koroit facility and the closure of its Coburg plant, and a highly competitive milk market all impacted profit for the year.
Earnings fell 3.0 per cent to $89.5 million as a result of the one-off acquisition costs.
CEO Paul van Heerwaarden said the company “worked tirelessly to balance delivering the strategic objectives of the business in an unprecedented competitive environment for milk”.
Although profit suffered, revenue increased by 13 per cent to $1.42 billion on a record milk intake of 1.06 billion litres.
Bega chairman Max Roberts pointed to stiff retail prices which put pressure on suppliers.
“FY2019 will go down in history as one of the most difficult dairy farming years ever experienced. The one in one-hundred-year drought, extremely high grain, hay and water prices, and continually suppressed retail selling prices for our quality dairy products has really tested the strength and resilience of our dairy suppliers,” Roberts said.
“It also created intense competition for the diminishing available milk pool which put pressure on underlying profit.”
He said Bega’s investment in advancing over $38 million to suppliers via its Supplier Premium and related supply agreements “should buffer some of the intense competition for milk” into FY2020.
