The share price of Bega Cheese Ltd (ASX: BGA) has popped around 2% higher today after the manufacturer and distributor of dairy products reported a pleasing interim profit result.
With the share price slumping over 20% since the beginning of January primarily in response to a decision by Coles to not renew its supplier arrangement with Bega for its "own brand" cheese, now could be the right time to take a closer look at this leading brand owner.
Here are the result highlights on a normalised basis for the six months to December 31:
- Revenue increased 2% to $561 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 5% to $33 million
- Net profit after tax increased 10% to $15 million
- Earnings per share increased to 10% to 9.7 cents per share (cps)
- A fully franked interim dividend of 4.5 cps was declared which is an increase of 0.5 cps on the prior corresponding period
- Net debt increased to $75 million
What's next for Bega
Given the outstanding success a2 Milk Company Ltd (Australia) (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL) have been enjoying with their infant formula products there would certainly appear to be plenty of opportunity for competitors to snare a share of this lucrative market.
Bega, as a contract manufacturer for Bellamy's has already been benefiting from higher volumes. However it's the group's recent announcement that it has formed a partnership with trusted health and vitamin brand owner Blackmores Limited (ASX: BKL) that is a particularly exciting potential future growth driver for the group.
