Bega Cheese Limited (ASX: BGA), established in 1899 and headquartered in Bega, Australia, is involved in the business of receiving, processing, manufacturing, and distribution of dairy and other food-related products across Australia.
On May 1st, 2019, Bega announced that the Federal Court of Australia had confirmed the company’s right to continue to use the trade dress associated with the peanut butter products, that it acquired as part of its purchase of the Mondelez Grocery Business in 2017.
In hindsight, the proceedings began in the Federal Court after Kraft Heinz filed a claim stating its ownership over the peanut butter trade dress which includes a jar, that would appear brown when filled, with a yellow lid, a yellow label and a blue or red peanut device. Kraft Heinz produces and markets food and beverage products worldwide, and it requested to prevent Bega Cheese from using the same packaging.
Reportedly, the Federal Court has refuted Kraft Heinz’s claim and termed its use of trade dress as misleading under the Australian law. As a result, Bega Cheese’ factory at 1 Vegemite Way Port Melbourne will resume the production of Australia’s most liked Smooth, and Crunchy Peanut Butter products, which it has done for more than 55 years.
On 27 February 2019, the company announced an ordinary fully paid dividend of AUD 0.055, and paid it out on April 16th, 2019, with respect to the six months to December 30, 2018. Simultaneously, Bega Cheese also announced the results for the first half of the financial year 2019 (1H FY2019) which was very crucial from a strategic point of view and witnessed some short-term challenges. Accordingly, the total revenue for the period was around $649.2 million, which is 6% higher than the first half of 2018 (1H FY2018).
Of the total, a net revenue of $65.0 million from August 17th, 2018 was derived from the acquisition of Saputo Dairy Australia Pty Ltd’s dairy processing facility at Koroit in western Victoria (Koroit Facility). Besides, the company generated a statutory earnings EBITDA of $ 39.6 million, down 23% on $12.1 million in the prior period (1H FY2018) and a statutory PAT of $ 5.0 million (-76%). Moreover, several normalised one-off transaction costs totalled to $18.6 million before tax.
The operating activities resulted in net cash burns of $128.3 million in 1H FY2019, contrary to the net cash inflow of $ 5.4 million in the prior 1H FY2018. As on December 30, 2018, the net working capital was valued around $379.3 million, which is an increase of $172.6 million relative to June 30th, 2018 and $121.2 million as of December 31st, 2017. The net debt stood at $ 468.1 million at the end of 1H FY2019 (+ $ 222.6 million from June 30th, 2018).
Bega Cheese has a market valuation of around AUD 1.08 billion with ~ 213.73 million outstanding shares. On May 1st, 2019, the BGA stock price settled the trading session at AUD 5.320, zooming up 5.138%, by AUD 0.260, and around ~ 1.24 million shares traded.
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