Bega Cheese Faces Inflation Risks Despite Strong FY2025 Earnings Growth
Bega Cheese Limited reported a robust FY2025 with a 23% rise in normalised EBITDA, driven by strong branded product growth and a turnaround in its Bulk segment. The company forecasts further gains in FY2026 with new product launches and operational efficiencies.
- Normalised EBITDA up 23% to $202 million in FY2025
- Bulk segment returns to profit with $38.7 million EBITDA
- Branded segment shows strong volume growth and new product success
- Net debt reduced by $36.3 million, leverage ratio improves to 0.8 times
- FY2026 EBITDA guidance set between $215 million and $220 million
Strong Financial Performance Amid Strategic Restructuring
Bega Cheese Limited has delivered a solid financial performance for the fiscal year ended June 30, 2025, posting a statutory EBITDA of $165.5 million and a normalised EBITDA of $202 million. This represents a 23% increase over the previous year, underscoring the company’s successful execution of its growth and restructuring strategies.
The company’s Branded segment continued to thrive, benefiting from strong volume growth in white milk, yoghurt, and spreads, alongside the successful launch of high-protein and 'better for you' products. These innovations have helped Bega maintain and grow its market share in key categories, including foodservice and Asian markets.
Bulk Segment Turnaround and Operational Efficiency
Notably, the Bulk segment returned to profitability with an EBITDA of $38.7 million, a significant turnaround from a loss of $18.2 million the previous year. This improvement was driven by a realignment of dairy commodities and farm gate milk prices, coupled with a focus on higher-value dairy products.
The company also undertook several transformational initiatives, including the exit from juice primary processing in Leeton NSW and consolidation of cheese packaging operations from Strathmerton Victoria to Bega NSW. While these restructuring efforts incurred costs and asset impairments, they are expected to enhance operational efficiency and position the business for sustainable growth.
Balance Sheet Strength and Dividend Policy
Bega Cheese reduced its net debt by $36.3 million to $126.1 million, improving its leverage ratio from 1.3 to 0.8 times. This deleveraging reflects disciplined working capital management and stronger operating cash flow. The company declared a fully franked final dividend of 6.0 cents per share, bringing the total dividend for FY2025 to 12.0 cents per share, signaling confidence in its financial position and future prospects.
Outlook and Growth Prospects
Looking ahead to FY2026, Bega Cheese expects continued growth in its Branded segment and stable returns from Bulk operations. The company plans to launch several new products from its development pipeline, which should further drive branded revenue. Manufacturing rationalisation initiatives are forecast to improve efficiency and help mitigate inflationary pressures, with full benefits anticipated in FY2027. The Group has provided guidance for normalised EBITDA in the range of $215 million to $220 million for FY2026, reflecting a positive growth trajectory.
Bottom Line?
Bega Cheese’s strategic restructuring and product innovation set the stage for sustained growth, but investors will watch closely how inflation and market dynamics impact the FY2026 outlook.
Questions in the middle?
- How will inflationary pressures affect Bega Cheese’s cost structure and margins in FY2026?
- What impact will the manufacturing rationalisation have on operational capacity and workforce?
- How competitive will Bega’s new product launches be in key domestic and Asian markets?