Bega Cheese reported in a trading update to the ASX yesterday that although the brand is likely to experience a $40 million hit this financial year, COVID-19 associated costs are easing and the market is recovering.
The food manufacturer has been majorly impacted by the pandemic, floods in Central Australia and Russia’s invasion of Ukraine, while the recent lockdowns in Shanghai have disrupted product deliveries in China.
“There have been increases in input costs associated with the outbreak of war in Ukraine and now also concern on the certainty of deliveries of products destined to the China market scheduled through the port of Shanghai due to lockdowns in that city,” the company said.
As a result, Bega Cheese has predicted a normalised earnings before interest, tax depreciation and amortisation of $175-190 million for the year and is continuing to manage several one-off costs, following more than $20 million impacted in the first half of the year.
Despite this, international dairy prices have strengthened, the company said in the ASX announcement.
“Bega Cheese’s balance sheet remains strong, and the company continues to execute its capital program focused on site and supply chain efficiencies, capacity increases and product innovation in high growth categories. Bega Cheese expects its leverage ratio to reduce in FY2022 to approximately 2.0.”
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