Bega Cheese Ltd (ASX: BGA) reported its result for FY19 this week, is the Bega share price too good to ignore?
Bega is one of Australia’s largest dairy businesses, it has been producing dairy products since 1900. These days it usually sells more than 1 million packs of cheese a day across a variety of brands. Its brands includes Bega, Vegemite, Bega Peanut Butter and ZoOSH. It also owns Tatura, which is a producer of infant formula and cream cheese.
Bega’s Painful FY19 Report
The cheesemaker revealed that its revenue increased by 13% to $1.42 billion over the year. The milk intake increased by 41% to just over 1 billion litres and production grew by 8%.
During the period, Bega said Vegemite extended its reach with the launch of gluten free Vegemite and it also launched the Bega Simply Nuts peanut butter range.
Normalised EBITDA (click here to learn what EBITDA means) rose by 5% to $115.4 million, but normalised net profit after tax (NPAT) fell 13% to $38.3 million.
However, statutory EBITDA declined by 3% to $89.5 million and statutory net profit declined by 59% to $11.8 million.
Bega Cheese outlined that there were one-off acquisitions costs related to the Koroit facility and Coburg closure costs which affected the statutory numbers.
Bega Cheese Management Comments
Bega Cheese Chairman Max Roberts said: “Whilst we are pleased to announced record milk intake, production, revenue and underlying financial performance, the Board and management note our profit was below the expectations we set ourselves at the beginning of the year primarily as a result of milk competition in a declining milk market.”
Is The Bega Share Share Price A Buy?
Management said in early August that competition for milk has never been stronger in the last quarter, and it’s setting the FY2020 milk price.
Milk pricing may be affected again in the second half of FY20, although management think the company is well positioned for future growth.
Bega Cheese seems somewhat of a commodity play on the dairy sector, I’m not jumping to buy shares today, even with the share price lower in recent times. I think the reliable shares in the free report below could be much better picks.
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