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Australian Bega Cheese Company Net Profit Up 9.9 Percent
February 25, 2016

Bega Cheese’s booming business in high value nutritional powders has helped rev up its underlying net profit 9.9 per cent and has prompted the company to expand capacity at its two-year-old canning facility in outer Melbourne.

It has posted a normalised net profit after tax of $14.8 million for the six months to December 31 after lifting revenue to $561.4 million.

Revenue from dairy nutritional powder products, which Bega has made at its Tatura plant in Victoria for about 30 years, jumped 32pc in the past six months and is expected to be even better in the second half following the January 16 launch of a special infant formula range in partnership with vitamins maker Blackmores.

The Blackmores deal, announced in October, will expand into other products for markets across all ages in Australia and Asia  “The link between dairy and the health and pharmaceutical market sectors is now a major focus in our business development,” said executive chairman Barry Irvin.

The South East NSW-based dairy business has also reported a 6.4pc lift in milk receivals in the past half-year, despite strong competition for milk from rival processors in NSW and Victoria and leaner returns on global markets awash with surplus European production and slowing Chinese demand growth for commodity lines.

Mr Irvin estimated milk receival volumes had grown by about 15pc in the past 18 months, largely due to the company’s strongly supported milk sustainability and growth program incentives during the past three years, which added about 3000 extra cows to herds supplying Bega.

Mr Irvin attributed the company’s profitability rise to an increasing focus on producing higher value-added products instead of commodities, including branded nutritional powder and packaged cheddar cheese and cream cheese for retail and food service customers overseas.  Bega, already Australia’s biggest name in the cheese game with 14pc market share, is recording double-digit growth in some of its export markets.

Despite regions like the Middle East experiencing some notably difficult socio-economic and political conditions, Mr Irvin said a consistent brand presence in the region for more than 20 years had paid off with strong market growth and loyalty.  Bega will pay an interim dividend of 4.5 cents a share on March 17 – up slightly on last financial year’s first-half payout of 4c.

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