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BGA - Bega Cheese

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According to Todays Australian
Bega up 4% today, so perhaps the market approves.
Mate of mine just got a retirement from Bega after 38 years there.
Very generous package he could not resist.
Mick
 
But earlier in the week, BGA dropped 10% when it posted guidance that disappointed investors despite the FY earnings being as much as 50 per cent ahead of fiscal 2021, sitting between $195 million and $215 million.

Bega blamed lockdowns for “extensive and significant” market disruption in food service channels. The pandemic has put pressures on the company that have resulted in “significant operational disruption”, including
  • factory shutdowns,
  • major changes to operations and logistics scheduling,
  • increased safety and testing regimes plus
  • major cost increases and shortages across the supply chain.
The company also blamed the “structural change in the Chinese infant and toddler dairy nutritional market” for the bearish guidance.
 
Trading update today, and Bega have seen further reductions in forecast earnings at 175 to 190 million.
They reckon COVID related issues with staff and the recent floods in NSW have added 40 mill in costs to the bottom line.
Issues with deliveries in the locked Shanghai region have also impacted.
The only good part is that world dairy prices are strongly up.
Maybe if the Covid issues are largely behind us, it may have a better year next year.
In the meantime, just sitting it all out.
In for the long haul.
Mick
 
BGA hit a new 52 week low of 3.67 on the opening, but it seems some buyers think its a good entry point, now up to 3.78.
Food will not be getting cheaper, though the cost pressures will not have eased much.
Recent rains in NSW have had a further adverse impact, but methinks all the bad stuff has been factored in.
Mick
 
Today's Weekend AFR reports: broker research , unavailable to the mums and dads, has led to BGA 's S.P. being down 34 % for this year.
Some pretty fierce selling from Insto's like fund manager Perpetual, dumping over a million shares ( at $ 4.37 on June 16th and $ 3.83 on June 30th ).
The company hinted at rising costs, last month when it said it would be paying its dairy farmers more for milk.
 
IrishDigger said:
I reckon the taste of Vegemite has changed and a browse on the question, 'Has The Taste Of Vegemite Changed' supports my belief, this is despite denials by Bega Management.
Click to expand...
I reckon it hasn't really changed.

It does mature or ripen after opening I have found.
Once opened is a sharper taste, after aging, it seems to mellow down and "dry out" a bit. A function of the yeast perhaps. Forget beef stock cubes, use Vegemite ?
 
dyna said:
..The company hinted at rising costs, last month when it said it would be paying its dairy farmers more for milk.
Click to expand...
rising milk price over June and July has seen Bega revise FY 2023 normalised EBITDA to finish between $160 million and $190 million, versus guidance between $175 million and $190 million in FY 2022.

Bega said it had been able to pass through many of the higher input costs to retail and wholesale markets, but Victorian farmgate milk prices had soared 30 per cent over FY 2022 prices.
 
and down 9%. Now $3.23
 
.
Dona Ferentes said:
Click to expand...
One of the reasons for the milk price rise is the appearance of "milk brokers".
These middle men/woman/persons are buying milk directly at the farm gate, they then aggregate it into some larger volumes, and then onsell to one of the producers for the best price.
Its another player who has inserted himself/herself/theyself into the mix without adding a single thing, but of course clipping all the tickets on the way through.
The producers only have themselves to blame, they have been screwing the farmers for years, now the tables have turned.
Mick
 
Bega got a please explain letter from the headmaster.
Answered them , will have to wait and see whether the headmaster is satisfied with the response.
Mick
 
The July Update referred to a previous ASX announcement made by BGA titled “Trading Update FY2023” (April Update) in which BGA:
• Gave an update on various disruptions to its business, including the continuing impact of COVID-19, floods in various regions around Australia, the war in Ukraine and lockdowns in Shanghai, and the extent to which these disruptions would add additional costs to the BGA business.
• Noted the strengthening of international dairy prices and the increased competition for milk in Australia being reflected in the payment by the majority of dairy companies, including BGA, of higher farm gate milk prices.
• Provided guidance of normalised EBITDA for FY2022 of $175 to $190 million.

The July Update provided a further update on these matters:
• Commenting that BGA has been able “to pass through many of the increased business costs it experienced in FY2022 in the form of higher wholesale and retail prices or mitigate the impact through various initiatives.”
• Noting that there is “ongoing cost pressure of robust competition amongst dairy processors for milk referred to in the April Update.”
• Providing guidance of normalised EBITDA for FY2023 of $160 to $190 million.

So, who's come a-nibbling?
The agrifoods unit of Tattarang, Andrew Forest's investment arm, has lifted its stake in Bega to 11.5 per cent after buying an additional $15 million in shares, acquiring an extra 4.55 million shares in Bega, continuing the steady accumulation of a holding in the food group that began nine months ago. The substantial shareholder notice to the ASX late on Friday showed it had lifted its holding from a previous 10 per cent stake.
 
The current chart of BGA is screaming buy (to me) and I'm very tempted. But BGA has frequent large selloffs (down days) in the past year. The subconscious buy is stilled by the conscious no. This is one situation that I can't win. I'll just note it here for posterity.

I'm aware of the recent purchase by Tattarang (agri-foods division). This is a plus.


Combo portfolio would buy 6600 at 3.82, conservative iSL at 3.50, although I'd probably sell at 3.60.
 
I looked at this last night. A good recovery play i.m.o.

Has hit a multi-year zone of support and reversed. The latter stages of the sell-off coincided with an increase in volume as well. Volume tapered off during the bounce which isn't ideal....could change though.

I don't hold...yet
 
Bega full year out.
Bit of a mixed bag, sales up significantly due to the various takeovers, but EBITDA down for the same reason.
Managed to pay debt down some 60mill, which is good news in this increasing cost of debt environment.
Operating cash flows good, which support debt reduction, capex and dividend payments.
Still maintaining dividends, so I am happy with the performance, even if the market may not.
Mick
 
debtfree said:
And away it goes!
Click to expand...
Interesting, because on the surface, the news was all bad. But I guess it wasn't worse, so we had a relief rally/ short covering action?
I guess the earlier July updates, themselves a reaction against a poor market, milk price rises, and 'wall of worry', calmed things, enough.
  • reported a 69 per cent decline in profit after tax to $24.2 million, impacted by COVID-19, rising costs and supply chain disruptions.
  • Normalised profit after tax rose to $46.2 million, up from 39.6 million in FY21.
  • Normalised EBITDA, which excludes the integration costs of the Lion Dairy and Drinks business and the benefits of the Reckitt contract termination, rose to $180.1 million.
  • Bega confirmed July earnings guidance normalised EBITDA range of $160 million to $190 million.


 
Good evening,
Particularly enjoyed reading as well, orward guidance, revealing EBITDA of $160m-$190m in FY23 along with the following quote from management, “The benefit of increased consumer prices has started to flow through in FY2023 across all channels and product categories with the full impact to be felt in FY2024."

Kind regards
rcw1
 
One of my picks for the 2023 full year competition.

It's not an industry I know overly much about but the stock looks reasonably beaten up compared to the actual business so far as I can determine. The nature of the product isn't going out of business, it's the sort of thing that'll survive pretty much any economic conditions.

That's really it. It's due for a rebound I suspect.
 
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