Bega’s Manufacturing Shakeup Sparks Statutory Loss Despite Profit Rise
Bega Cheese delivered a robust FY2025 performance with a 23% rise in normalised EBITDA and a 74% jump in profit after tax, underpinned by strategic brand growth and operational efficiencies. The company raised its FY2026 EBITDA guidance and outlined ambitious plans for international expansion and product innovation.
- Normalised EBITDA up 23% to $202 million in FY2025
- Profit after tax rises 74% to $50.8 million despite statutory loss
- Manufacturing footprint rationalisation underway with site consolidations
- Net debt reduced to $126.1 million; leverage ratio improved to 0.8x
- FY2026 EBITDA guidance set between $215m and $220m; $250m target by FY2028
Strong Financial Momentum
Bega Cheese Limited has reported a strong set of results for the fiscal year ending 2025, showcasing a 23% increase in normalised EBITDA to $202 million and a 74% rise in normalised profit after tax to $50.8 million. These gains come despite a statutory loss driven by significant impairments related to the company’s ongoing manufacturing footprint rationalisation.
The company’s net revenue grew modestly by 0.5% to $3.54 billion, navigating price deflation in some cheese and fresh milk categories alongside challenging consumer sentiment. Notably, the branded segment delivered a 3% increase in EBITDA, reflecting the success of Bega’s focus on innovation and key product categories.
Strategic Transformation and Operational Efficiency
Bega’s transformation journey continues to gain traction, with the company advancing its strategic plan to become a leading branded food business. Key operational highlights include the consolidation of the Strathmerton cheese site into the Bega Valley facility and the planned exit of peanut processing operations at Kingaroy and Tolga within 12 to 18 months. These moves are part of a broader manufacturing rationalisation strategy aimed at streamlining operations and reducing costs.
Investment in automation is also underway, with the Laverton warehouse automation project expected to complete in the second half of FY2026. Additionally, the rollout of the “MyBega” business-to-business portal to over 20,000 customers is enhancing distribution efficiency and customer engagement.
Innovation and Brand Growth Driving Volume
Bega’s branded portfolio is expanding in line with evolving consumer trends, particularly in health-focused categories such as gut health, protein-enriched products, and weight wellness. New product launches like Dare Protein iced coffee, Dairy Farmers Protein smoothies, and Farmers Union Gut Good yoghurt have contributed to volume growth in white milk, yoghurt, and spreads.
The company increased marketing investment by $8 million to support these innovations and power brands, which now contribute the majority of branded revenue. Despite some price deflation in cheese and fresh milk, volume growth and category diversification have helped offset margin pressures.
Financial Position and Outlook
Bega’s balance sheet strengthened with net debt reduced by $36 million to $126.1 million and a leverage ratio improving to 0.8 times, well below FY2024 levels. Operating cash flow rose to $165 million, supporting increased capital expenditure of $94 million focused on automation, manufacturing consolidation, and capacity expansion.
Looking ahead, Bega provided guidance for FY2026 normalised EBITDA in the range of $215 million to $220 million, with a longer-term target of exceeding $250 million by FY2028. The company plans to accelerate international expansion in markets such as Singapore, Thailand, and Dubai, while continuing to innovate and manage costs effectively.
Bottom Line?
Bega Cheese’s FY2025 results mark a pivotal step in its transformation, but execution risks on site closures and international growth remain key watchpoints.
Questions in the middle?
- How will Bega manage the operational risks associated with site consolidations and closures?
- What impact will international expansion have on margins and overall profitability?
- Can Bega sustain volume growth amid ongoing price deflation in core dairy categories?
