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- COVID-19 related costs have bitten into Bega Cheese’s FY22 earnings, which are forecast to total between $195 million to $215 million
- BGA says supply chain disruptions, lockdowns, a changing Chinese market, and increased safety and testing costs have all affected the food business
- Bega noted the competition for milk remained fierce and the farm gate price of milk is expected to remain high throughout 2022
- On a positive note, the consumer stock says its Lion Dairy and Drinks integration and synergies remained on target
- Bega Cheese shares were down 12.8 per cent at $4.90
COVID-19 related costs have bitten into Bega Cheese‘s expected earnings for the 2022 financial year.
The iconic cheese producer is now forecasting earnings before interest, taxes, depreciation and amortisation to total between $195 million to $215 million.
Explaining the impact of COVID-19 on the business over the last six months, BGA said the impact of lockdowns were widespread.
The company said the impacts have been extensive and significant, including from market disruption in Australian food service channels as a result of lockdowns.
Bega also noted structural change in the Chinese infant and toddler dairy nutritional market, factory shutdowns, changes to operations and logistics scheduling, and increased safety and testing regimes costs had all impacted its bottom line.
Beyond COVID-19, the food producer also warned the competition for milk remained fierce and the farm gate price of milk is expected to remain high throughout 2022.
“Despite positive seasonal conditions, farm milk supply across the Australian dairy industry remains flat to declining with strong competition for supply continuing,” BGA said.
The company blamed the likely price hike on high global dairy commodity prices, limited supply availability and increased competition.
On a more positive note, Bega revealed its Lion Dairy and Drinks integration and synergies remained on target.
The business announced it would acquire the fellow dairy company late last year in a $500 million deal.
Bega Cheese shares were down 12.8 per cent at $4.90 at 12:30pm AEDT.
