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Tag: Bega Cheese

  • Bega Cheese Eyes Acquisition Of Fonterra Oceania: A Potential Boost For Australia’s Dairy Industry

    Bega Cheese Eyes Acquisition Of Fonterra Oceania: A Potential Boost For Australia’s Dairy Industry

    Bega Cheese, an Australian dairy company, has indicated its intention to file an application with the Australia Competition and Consumer Commission (ACCC) seeking authorisation for its planned acquisition of Fonterra Oceania.

    Enhancing Outcomes through Acquisition

    Bega Cheese believes that the prospective acquisition would greatly improve the company’s performance and efficiency, and it would also have substantial benefits for the broader dairy industry. The company argues that combining its resources with those of Fonterra Oceania would result in improved efficiencies and outcomes for Australian dairy farmers, customers, and consumers.

    Bega Cheese is of the view that it is the most suitable acquirer of Fonterra’s Oceania businesses and is keenly interested in pursuing this opportunity. The company is hopeful of engaging in productive discussions with Fonterra Group on the sale of its Oceania businesses.

    Domestic Acquisition not Subject to Foreign Review

    As Bega Cheese is an Australian business, it expects that the potential acquisition will not require the approval of the Foreign Investment Review Board (FIRB).

    Fonterra’s Divestiture Strategy

    In November, Fonterra revealed its plans to divest by pursuing a trade sale and an initial public offering of its global consumer business, as well as its integrated businesses Fonterra Oceania and Fonterra Sri Lanka. The company believes that this divestment will allow it to concentrate its resources on the ingredients and foodservice businesses, thereby maximising value.

    Fonterra’s consumer business includes the operations and marketing of a variety of brands, such as Mainland, Anchor, Kapiti, and Anlene.

    Questions & Answers

    Why is Bega Cheese planning to acquire Fonterra Oceania?
    Bega Cheese believes that the acquisition of Fonterra Oceania would greatly improve its own business efficiencies and performance.

    Who needs to approve the acquisition?
    The Australia Competition and Consumer Commission (ACCC) needs to approve the acquisition.

    What is Fonterra’s rationale behind its divestiture strategy?
    Fonterra believes that by divesting, it will be able to concentrate its resources on the ingredients and foodservice businesses, thereby maximising value.

  • Bega Cheese reports strong market share growth for FY23

    Bega Cheese reports strong market share growth for FY23

    Bega Cheese says it has gained market share and margin momentum in the second half of the year following significant cost increases in the first quarter.

    For FY23, the dairy company achieved a revenue of $3.4 billion, marking a 12 per cent rise from the previous year. It closed the fiscal year with a net debt of $203.6 million and a reduced leverage ratio of 1.6 times.

    Statutory EBITDA (earnings before interest, tax, depreciation, and amortisation) was $144.1 million, with a post-tax loss of $229.9 million significantly impacted by non-cash asset impairment of $230 million.

    Meanwhile, normalised EBITDA was $160.2 million, with a profit after tax of $28.5 million.

    According to Bega, its strategic decisions in the past five years played a pivotal role this year as it navigated “difficult and rapidly changing” conditions.

    The implementation of price adjustments, cost reduction initiatives, and a stream of new products significantly improved the financial performance of the Branded segment, particularly in the latter part of the year.

    However, the continued decline of milk production and excess milk manufacturing capacity have created a highly competitive environment and a disconnect between returns from globally treated commodity markets and Australian farm gate milk prices.

    Bega said this scenario will continue for some time, resulting in a non-cash impairment and a strategic decision to right-size some of its commodity assets.

    Reflecting on the results, executive chairman Barry Irvin emphasised the company’s strategy to shift to a predominantly branded business model.

    “The non-cash impairment of our bulk commodity assets reflects industry circumstances and reinforces the importance of our strategy to transform to a predominantly branded business,” said Irvin.

    “The right-sizing of our commodity assets and their further integration with our branded business creates a great platform for the support and growth of our brands while maintaining the capability to respond to changing market circumstances.”

    Looking ahead, Bega has outlined a restructuring and simplification program to accelerate its transition to an integrated, predominantly branded business.