S&P/ASX 200 Index (ASX: XJO) share Bega Cheese Ltd (ASX: BGA) just slashed its final dividend by 45%.
Did you guess that one correctly? If so, go to the head of the virtual class!
Bega Cheese revealed the big dividend reduction alongside slumping profits when the ASX 200 share released its results for the financial year ending 30 June this morning.
Despite the cut in passive income that shareholders will be receiving, the Bega Cheese share price is up 0.8% at $3.22 per share in afternoon trade on Thursday.
Here's what you need to know.
ASX 200 share reels in final FY23 dividend
Starting with the dividend, Bega Cheese declared a final fully franked dividend of 3 cents per share. That's down 45% from last year's 5.5 cents per share final dividend.
The total FY23 dividend payout comes to 7.5 cents per share, or $22.8 million. That's down from the 11 cents per share paid out in FY22.
Eligible investors can expect the final dividend from the ASX 200 share to hit their bank accounts on 21 September. The dividend reinvestment plan (DRP) will be activated.
What else happened during the year?
Bega Cheese said it operated in "difficult and rapidly changing conditions" in FY23 while continuing to position the business for growth.
The ASX 200 share noted that the ongoing fall of milk production in Australia coupled with excess milk manufacturing capacity created a highly competitive milk procurement environment.
This led to a disconnection between the returns it received from internationally traded commodity markets and the Australian farm gate milk price. Bega Cheese said it expects these circumstances to persist in FY24.
As for other key financial metrics, Bega Cheese reported FY23 revenue of $3.4 billion, up 12% year on year.
As at 30 June, the ASX 200 share had net debt of $203.6 million. That is down 23% from the net debt the prior year.
Normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at $160 million, down 11% from FY22.
Normalised profit after tax declined 38.4% year on year to $28.5 million.
Among the headwinds over the year, the company cited a 30% increase in farm gate milk and other inflation, which was partly offset by its pricing and product mix premiumisation.
What did management say?
Commenting on the results that are seeing the ASX 200 share in the green today, executive chairman Barry Irvin said:
The non-cash impairment of our bulk commodity assets is reflective of industry circumstances and reinforces the importance of our strategy to transform to a predominantly branded business.
The right sizing of our commodity assets and their further integration with our branded business creates a great platform for the support and growth of our brands while maintaining the capability to respond to changing market circumstances.
What's next for this ASX 200 share?
Looking at what could impact the ASX 200 share in the year ahead, the company said it expects its financial performance to be "relatively flat" in FY2024.
Normalised EBITDA is forecast to fall in the range of $160 to $170 million, with a more positive outlook in the medium term.
Bega Cheese CEO Pete Findlay said:
The Bega Group's combination of leading iconic brands, strategically located milk processing, and more flexible manufacturing capacities supported by an extensive cold chain distribution network remains a significant strength of the business.
Bega Cheese share price snapshot
There have been some big moves higher and lower for the Bega Cheese share price over the past full year.
With larger downswings than upswings, the ASX 200 share has slipped 12% over 12 months.
