Bega Cheese's revenue has slipped, but its half year profit after tax has leapt 154 per cent above the same period last year to $21.7 million.
Milk supply shortages, lower global dairy prices and the swift rise in the Australian dollar's exchange rate chewed into the big dairy and grocery manufacturer's revenue, which ended the six months to December 27 down almost five per cent, or $33m, at $708m.
Moving out of the lower value contract cheese making business also cost the company some cash flow.
Bega's big profit jump - up from just $8.5m a year ago - and normalised earnings before interest tax depreciation and amortisation of $73m - up from $24.5m a year ago - reflected a handy full six months of earnings from its new lactoferrin plant at Koroit in south western Victoria.
Also up 13.6pc was Bega's value share of the spread market where it dominates with peanut butter and Vegemite.
Its core peanut butter range grew almost 16pc to win a commanding 82pc of Australia's mainstream peanut butter market, while its Simply Nuts line grew to 21pc of the natural peanut butter market.
The November launch of Vegemite's "squeezy" line helped it grow the brand's share of the yeast spread category.
However, the company has justified a relatively restrained first half dividend payout of five cents a share saying it was being prudent about cash management as it integrated its newly acquired Lion Dairy and Drinks operation into the business.
While Bega's local and international branded business and its nutritional product sales continued to grow during the period, earnings were hurt by the loss of food service and export opportunities because of the coronavirus pandemic.
In particular, COVID-19's impact on international travel and the lucrative daigou shopping market to consumers in China caused the infant formula business to take a big hit.
"The outlook in this category remains challenging and Bega continues to respond by diversifying its revenue streams through product innovation and new customer development," the company reported to shareholders.
The NSW South Coast based business' January $534m buyout of national milk processor Lion did not result in any contribution to first half earnings from the acquisition, but executive chairman Barry Irvin said the deal provided a platform for further growth in offshore markets.
Lion's Australia-wide and export market presence would support product innovation across Bega's much expanded portfolio.
The Lion deal has extended Bega's market footprint into new branded dairy categories such as yoghurt, white milk, flavoured milk and juice.
"The acquisition delivers important industry consolidation and value creation with synergies across the entire supply chain," he said.
"The expanded product range, manufacturing and distribution infrastructure and brand portfolio realises our ambition of creating a truly great Australian food company."
Although an organisational shakeup across the expanding Bega business was cutting non-manufacturing overheads and improving the company's global competitiveness, earnings from milk products were squeezed.
Notably, the conclusion of former Murray Goulburn milk supply agreements with suppliers to the Koroit plant saw some farmers lured to other processors by the stiff competition for milk across the dairy sector.
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