Bega Cheese has announced its full year audited results for the financial year ended 30 June 2021, a year in which it completed a transformational acquisition which expanded its branded foods portfolio, increased its exposure to and gained market share in growth categories and added significantly to its consumer goods supply chain and organisational capability.
Bega Cheese generated normalised earnings before interest, depreciation and tax (EBITDA) of $141.7 million in FY2021, 38 per cent higher than the prior year and sales revenue of $2.07 billion, with a net debt of $324.9 million and an adjusted net debt/normalised EBITDA leverage ratio of 2.25.
Executive chairman Barry Irvin said the importance of consistent strategy and strong values was never more evident than in times of uncertainty.
"Our capacity to be agile and change, while remaining confident in the core direction and strategy was again tested and on display in the past financial year as we executed the acquisition of Lion Dairy and Drinks. We continue to adapt our business to operate in a COVID-19 safe manner and respond to changing customer and supplier requirements," he said.
The $528 million acquisition of Lion Dairy and Drinks, mostly funded by a $393 million net capital raise, saw Bega Cheese more than double in size in terms of both annualised revenue to approximately $3.0 billion, and employees to over 4,000, expand its cold chain distribution network to now be one of the largest in the country, and significantly increase its proportion of sales from branded products from 59pc to in excess of 80pc.
Strong farm gate relationships along with the flexibility of a globally competitive supply chain helped navigate fluctuations in demand for product and a competitive market for milk supply, Mr Irvin said.
"Our people have, over the past year, continued to respond with agility, passion and dedication to the needs of customers, the community and the business, developing innovative solutions to new challenges and ensuring that our much-loved iconic branded products continued to reach both supermarket shelves and the hands of consumers - despite the challenges of the COVID-19 pandemic," he said.
In addition to the acquisition of Lion Dairy and Drinks Bega Cheese completed and implemented the recommendations of an operational review, successfully concluded two long-running legal disputes, responded to the termination of service and access arrangements at the nutritional powder and canning facility in Derrimut and expanded its branded product offering in growth categories with new product launches.
Bega Cheese experienced a softening in demand for infant formula during the year due to changes in the Chinese market created by shifts in customer preferences and a weakened Diagou channel. This drop in demand was recognised by the business and mitigating initiatives have been implemented to reduce the financial impact whilst still retaining the capability to service customers in the future.
Bega Cheese had consolidated debt of $325 million as of 30 June 2021, compared to $231 million at 30 June 2020, an increase of $94 million.
The movement in net debt arose mainly from $125 million of net proceeds from borrowings to partially fund the acquisition of Lion Dairy and Drinks, capital and software investment. The increase was offset by operating cash inflows of $111.4 million.
Bega Cheese reduced its normalised EBITDA to net debt leverage ratio from 2.35 times to 2.25 times, well within year end bank covenants of 3.0 times, and expects its leverage ratio to continue to trend favourably throughout financial year 2022.