The Share Price Of Bega Tumbled By 12.324% After Its Market Update

Bega Cheese Limited (ASX: BGA) which is into the business of dairy and cheese products announced its acquisition of Koroit on 19 December 2018 and its overall business performance.

As a result of severe drought and the increased farming cost, the dairy industry has suffered in Australia. It resulted in the fall of milk supply by 5% in FY2018. On the other hand, the company highlights that it was successful in its milk acquisition program and it believes that in FY2019, that there will be an inflow of milk in between 1 to 1.1 billion liters.

Due to a decrease in the milk supply in the Australian market, the company is experiencing pressure from milk pricing which might be the possible reason which could impact the financial performance of FY2019. With the acquisition of Koroit, the company expects that in FY2019 its EBIDTA will be in the range of $123 million to $130 million which was only $109.6 million in FY2018.

The union of Koroit manufacturing facilities and the successful milk program has led to the increase in the inventory for that season which includes cost. The company further expects that in FY2019, the company’s normalized profit after tax will be in the range of $44 to $48 million.

The company also expects that the position of the company will be much better than its competitor as the acquisition of Koroit has helped in building the inventory for the season. The company expects that the first half and the second half of FY2019 will be more balanced as compared to FY2018.

The official listing date of Bega on ASX is 19 August 2018. Since then, the performance of the company is 208.70%. The five years performance of the company was 28.51%. However, since last one-year, the company is giving a negative performance.

For the FY2018 ending on 30 June 2018, the company generated revenue from the operating activities worth $1,438.281 million. The EBITDA for FY2018 was $92.023 million which is down by 60% as compared to FY2017. The net profit after tax was $28.768 million which also reduced by 79% as compared to FY2017 which is attributable to the shareholders of the company. The balance sheet of the company remains healthy in FY2018 where the company has maintained a net asset base of $631.991 million and a debt to equity ratio of 0.42 as per Thomson Reuters. The company maintains a total current asset of $469.031 million and a total current liabilities of $278.191 million which indicates that the company is in a position where it can meet the working capital requirements and its short-term obligations. The total shareholder’s equity was $631.991 million. FY2018 reports a decrease in the net cash and cash equivalent by $453.864 million. The net cash and cash equivalent by the end of FY2018 were $21.669 million.

By the end of the trading on 20 December 2018, the closing price of the share was $4.920 which is 0.070 points less than the previous day’s closing price. The stock holds a market capitalization of A$1.06 billion.


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