Bega Cheese shares soar 11% on profit jump

Bega Cheese shares are surging after a huge increase in earnings and profits.

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The Bega Cheese Ltd (ASX: BGA) share price is soaring today after the ASX 200 food and drinks producer reported its first-half earnings for the 2024 financial year (1H24) this morning.

Yesterday, Bega Cheese shares closed at $3.55 each. But this morning, the company opened at $3.66 a share before climbing up as high as $4.06 per share – a new 52-week high for the company. At present, Bega has cooled slightly but is still asking $3.95 a share, up a whopping 11.27%.

Bega Cheese shares rocket on solid half-year result

  • Revenue of $1.73 billion, up 3.2% over the first half of the 2023 financial year (1H23)
  • Statutory earnings before interest, tax, depreciation and amortisation (EBITDA) of $86.1 million, up 20.25% over 1H23
  • Normalised EBITDA of $76.5 million, up 2.55% over 1H23
  • Statutory profit after tax of $26.5 million, up 263% over last year's $73 million
  • Statutory earnings per share (EPS) of 8.7 cents, up 262.5% over last year's 2.4 cents
  • Interim dividend of 4 cents per share (fully franked) declared, an 11.1% drop over last year's interim dividend of 4.5 cents.

Although Bega's statutory profits jumped by 263%, normalised profits increased by a far tamer 41% to $13.3 million. Likewise, normalised EPS increased by 42% to 4.4 cents per share. These normalised results include the Canberra property sales, the acquisitions of Betta Milk and Meander Valley Dairy, and restructuring costs.

Bega also revealed that it has made a big dent in the company's debt. Bega reported net debt of $250.9 million as of 24 December, a $70.5 million reduction from the $321.4 million reported this time last year.

What else happened in 1H24?

As we just touched on, the acquisitions of Betta Milk and Meander Valley Dairy were some of the biggest events for Bega over the first half of the 2024 financial year. These acquisitions were announced back on 29 August and saw Bega acquire both brands from TasFoods Ltd (ASX: TFL) for a sum of $11 million, plus inventory.

Investors didn't seem that keen on the purchase at the time though, with the Bega Cheese share price declining in the days following the announcement:

What did the company's management say?

Bega Cheese management stated the following on these half-year results:

The result reflected the importance of the diversity of the Group with strong performance in Branded more than offsetting the decline in the Bulk segment.

The Group's revenue exceeded $1.7 billion, an increase of 3% on the prior year. This included growth of 8% in the Branded segment demonstrating continued strong demand for the categories we participate in and the brands in our portfolio.

The Bega Group maintained guidance of $160-170 million normalised EBITDA for FY2024.

Bega 2024 half-year earnings report

What's next for Bega Cheese?

As we just quoted, Bega management has opted to maintain its full-year guidance for the 2024 financial year at $160-170 million in normalised EBITDA. That's despite management's expectation of a moderation of "Australian economic circumstances" over the rest of the financial year.

Bega is anticipating that its ongoing cost and efficiency programs, as well as "improving industry environment for bulk business" will assist the company in this endeavour.

Bega Cheese share price snapshot

With today's stocks price gains under the belt, the Bega Cheese share price has had a pleasing few months. The company is up more than 24% over the past six months, and up 8.5% over the past year.

At the current pricing, Bega Cheese shares are trading on a market capitalisation of $1.08 billion, with a trailing dividend yield of 1.9%.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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