WCB share sale boosts Bega profit

19 Feb, 2014 11:05 AM
Bega chariman Barry Irvin.
Bega will continue to investigate opportunities to rationalise other players in the industry
Bega chariman Barry Irvin.

BEGA Cheese has confirmed an after-tax profit of about $44 million from the sale of its 10.5m shares in Warrnambool Cheese and Butter (WCB) on January 16.

Profits from the $100m share sale to Canadian dairy giant Saputo are not included in Bega's half-year profit result of $18.7m for the six months to December 29.

Bega sold its influential 18.8 per cent stake in WCB to Saputo after initially starting a three-way bidding war for the south-western Victorian dairy business on September 12 last year, offering 1.2 Bega shares and $2 for each WCB share.

With its balance sheet beefed up following the big share sale, Bega says it will continue to investigate opportunities to rationalise other players in the Australian dairy industry within its fold, despite failing in its merger plans for WCB and its own cheese and Tatura Milk Industries businesses.

The company's first half profit was up almost 18pc on the same period for 2012-13 following a 4.1pc rise in revenue to $510.6m.

While overall sales volumes were slightly lower because of an 8pc slide in milk intake volumes, a strong increase in global dairy commodity prices lifted revenue.

Bega has benefited from near-record export values for milk powder on major overseas markets in the past six months.

The group's operations include cheddar and processed cheese production at on the NSW South Coast at Bega, cheddar in Melbourne and cream cheese and specialty milk powder production at Tatura in northern Victoria.

It was able to optimise returns from milk solids by changing its product mix to boost development of nutritional powder products and lift overall revenue despite the loss of milk volumes.

Bega spent nearly $17m on capital expenditure in the first half, including projects to improve milk handling capacity at its Coburg site in Melbourne, developing whey drying capacity at Tatura and building a dairy nutrition powder blending and canning plant at Derrimut in Melbourne's west.

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media


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