Bega closing down its Coburg facility, jobs to go
Bega will close down its Melbourne cheddar and mozzarella plant this week, with the company saying it is not economically "viable".
Some staff will be redeployed following the closure of the Coburg site, in the city's north, but most would be made redundant, the company announced on Wednesday.
The plant makes cheese for Bega's private label and food service supply contracts.
In a statement to the Australian Stock Exchange, the dairy giant said it would continue in the cheddar and mozzarella business by sourcing cheese from Bega's other sites and contracted arrangements.
"The priority at this time is to support our employees," Bega said in a statement to the Australian Stock Exchange.
"The decision to close the site was made following a review of our network which concluded that the Coburg site's capacity and city location cannot viably support Bega's expected future growth."
A decision regarding the full exit from the site is expected to be made soon.
"We expect the realisable value to be below book value," the statement said.
Bega released its half-year results today, reporting a net profit plunge of 76 per cent, down to $5 million, because of a year plagued with "short-term challenges".
The company took a scalping to its statutory performance measures, with earnings before interest, tax, depreciation and amortisation also down 23 per cent to $39.6 million in the six months to December 31, 2018.
On a normalised basis, the company reported half-year profits of $18 million, down 48 per cent compared with the same period the year before, while EBITDA was down 17 per cent to $58 million.
The drought engulfing the country, a lag in the timing of sales and the acquisition of the Koroit Facility has been identified as some of the short-term challenges affecting the company’s results.
“We remain confident in the overall strategy of our business and expect to be at the lower end of our previous guidance of normalised EBITDA of $123-$130 million,” said executive chairman Barry Irvin.
Investors wiped off 5.39 per cent, or 26 cents off Bega’s share price shortly after the market opened, before it recovered much of the lost ground. At 11am AEDT, shares are 0.8 per cent lower at $4.78.