Agribusiness & Food

Bega talks up balance sheet as Murray Goulburn eyes suitors

Murray Goulburn will provide cheese for Coles' home brand. Photo: Dairy Australia

ASX-listed food producer Bega Cheese has outlined a strong and stable balance sheet to investors at its Annual General Meeting, but stopped short of addressing any potential acquisition of struggling dairy company Murray Goulburn.

Murray Goulburn in September announced it had fielded “a number” of confidential proposals from suitors looking to acquire all or part of its business, and was working with financial advisor Deutsche Bank to assess them.

Bega Cheese, considered a prime candidate to buy all or part of Murray Goulburn, was mum on any potential deal at the company’s Annual General Meeting on Tuesday, but did boast a strong balance sheet, with chief executive Paul van Heerwaarden saying the company was in a position to consider growth opportunities.

“Bega Cheese has always maintained a strong balance sheet believing that we should be in a position to respond to business opportunities if and when they present themselves,” van Heerwaarden said.

Bega acquired one of the most iconic brands on Australian shelves earlier this year – Vegemite – through an acquisition of most of Mondelēz International’s Australia and New Zealand grocery and cheese business in January.

In its annual report, the company noted revenue had risen from $1.20 billion in FY16 to $1.23 billion in FY17, despite a 0.5% drop in production volumes.

EBIDTA was up from $66.0 million in FY16 to $70.6 million in FY17, leading to an after-tax profit increase from $29.2 million to $30.3 million.

Bega handed out a 10c per share total dividend, up from 9.5c per share in FY16. The company is joined by Canadian firm Saputo as rumoured bidders for Murray Goulburn.

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