AUSTRALIA – Bega Group, Australian food company behind iconic brands like Bega and Vegemite, has forecast a notable increase in its normalized EBITDA for the upcoming financial year.

After a modest 2% rise in normalized EBITDA to A$164.1 million (US$111.6 million) for the year ending 30 June, Bega Group now expects this figure to reach between A$190 million and A$200 million in the new fiscal year, marking an anticipated growth of over 20%.

The company attributes this optimistic outlook to ongoing efforts in cost management and cash flow improvement.

However, it cautions that these projections hinge on “normal trading conditions.” Bega Group anticipates continued growth from its branded division and a marked improvement in its bulk business, which struggled in the past year.

In the previous fiscal year, Bega’s bulk business reported a statutory EBITDA loss of A$18.2 million, a stark contrast to the A$38.3 million profit recorded the year before.

This downturn was largely due to a “disconnect” between global dairy commodity prices and Australian farmgate milk prices. However, Bega Cheese expects this disconnect to diminish in the upcoming year.

Conversely, the branded division of Bega Group performed robustly, with statutory EBITDA soaring by 48% to A$206.2 million.

This success was attributed to the resilience of its brands amid challenging economic conditions, including low consumer confidence and downtrading.

Overall, group revenue increased by 4% to A$3.52 billion, with 86% of external revenue generated from its brands. Internationally, the company saw an 11% rise in sales from its brands, totaling A$257 million.

As part of its strategic realignment, Bega Group has begun reviewing its peanut processing assets in Australia.

In line with this, the company recently secured a “binding agreement” to sell its juice extraction factory in Leeton, New South Wales, to local juice producer Grove Juice.

Following the acquisition, Grove Juice will process fruit for Bega Group while expanding its own fruit business in the region. The agreement also includes the offer of employment to the existing staff at the Leeton facility.

In addition to these operational changes, Bega Group has made a strategic move in its marketing efforts by appointing The Royals as its new creative agency for the Dairy Farmers brand portfolio, effective from July 1, 2024.

This decision followed a competitive pitch process managed by Madclarity, with The Royals emerging as the successful candidate.

Dairy Farmers, one of Australia’s most iconic brands, has a legacy spanning over 120 years, offering a range of dairy products including milk, flavored milk, creams, yogurts, custards, and butter.

Matt Gray, Bega Group’s General Manager of Marketing and Innovation, expressed confidence in the partnership with The Royals, noting their strong understanding of the Dairy Farmers business and creative expertise.

Steve O’Farrell, Managing Partner of The Royals, emphasized the agency’s commitment to blending their ‘Most Interested’ philosophy with Dairy Farmers’ storied legacy to create impactful work.

Mark Leone, Managing Director of Madclarity, also praised The Royals for their strategic thinking and alignment with the Dairy Farmers brand.

Subscribe to our food and agriculture industry email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE