Bega Cheese Posts $202 Million EBITDA, Bulk Segment Returns to Profit
Bega Cheese Limited reported a robust FY2025 with a 23% rise in normalised EBITDA to $202 million, underpinned by branded growth and a turnaround in its bulk segment. Strategic manufacturing rationalisation and new product innovation set the stage for continued momentum.
- 23% increase in normalised EBITDA to $202 million
- 74% rise in normalised profit after tax to $50.8 million
- Bulk segment returns to profitability after realignment of milk prices
- Manufacturing footprint rationalisation with planned site closures
- FY2026 EBITDA guidance set between $215 million and $220 million
Strong Financial Performance
Bega Cheese Limited (ASX, BGA) delivered a solid FY2025 performance, reporting a 23% increase in normalised EBITDA to $202 million and a 74% jump in normalised profit after tax to $50.8 million. Despite modest revenue growth of 0.5%, the company achieved margin expansion and improved return on funds employed, reflecting operational efficiencies and strategic focus.
Branded Growth and Innovation
The company’s branded segment showed resilience and growth, driven by volume increases in yoghurt, spreads, white milk, and foodservice channels. Key product launches such as Dare Protein iced coffee, Dairy Farmers Protein smoothies, and innovative offerings like Whipped Bega Peanut Butter and Mars-flavoured milk contributed to category expansion. Marketing investment increased by $8 million to support these innovations and power brands, reinforcing Bega’s position in competitive categories.
Bulk Segment Turnaround
After a challenging period, Bega’s bulk dairy business returned to profitability with an EBITDA of $38.7 million, reversing a loss of $18.2 million in FY2024. This turnaround was largely due to better alignment of farm gate milk prices with global dairy commodity prices and a modest increase in milk supply. The company adjusted Victorian milk prices twice during the year, reflecting improved commodity market conditions.
Manufacturing Rationalisation and Cost Management
Bega continued its strategic manufacturing footprint rationalisation, announcing the consolidation of the Strathmerton cheese site into Bega Valley and the planned exit of Peanut Company of Australia sites at Kingaroy and Tolga within 12 to 18 months. The sale of the Leeton juice processing facility further streamlined operations. These moves, alongside cost-to-serve initiatives and warehouse automation projects, contributed to overhead savings and improved efficiency.
Balance Sheet and Outlook
The company strengthened its balance sheet, reducing net debt by $36 million to $126.1 million and lowering its leverage ratio to 0.8 times. Operating cash flow improved to $165 million, supporting increased capital expenditure on automation and capacity expansion. Bega declared a fully franked dividend of 12 cents per share, a 50% increase from the prior year. Looking ahead, the group provided FY2026 guidance of normalised EBITDA between $215 million and $220 million, aiming to exceed its $250 million EBITDA target by FY2028 through continued branded growth, innovation, and international expansion.
Bottom Line?
Bega Cheese’s FY2025 results underscore a successful transformation, but execution of site closures and international growth will be critical to sustaining momentum.
Questions in the middle?
- How will Bega manage the operational risks and costs associated with site closures through FY2027?
- Can new product innovations maintain growth momentum amid evolving consumer trends?
- What impact will international expansion in Asia and the Middle East have on overall profitability?
