Bega Cheese Limited (ASX:BGA) returned to statutory profit in FY26 as Revenue and Earnings increased across its Branded and Bulk operations. Normalised EBITDA reached A$225.6 million, while management provided FY27 guidance of A$240 million to A$245 million. The result indicates further earnings improvement is expected as recently completed restructuring and efficiency initiatives begin contributing, although higher net Debt and changing dairy-market conditions remain important considerations.

What the Company Does

Bega Cheese is an Australian food and dairy group operating across branded consumer products and bulk dairy ingredients.

Its Branded Business includes yoghurt, milk-based beverages, white milk, spreads and other packaged food categories. The Bulk division processes dairy ingredients and nutritional products while also supporting the group's branded Manufacturing requirements.

This combination provides exposure to consumer Demand as well as dairy Commodity and farm milk conditions.

FY26 Revenue and Earnings Increase

Revenue increased 6.7% to A$3,774.6 million in FY26 from A$3,539.0 million in FY25.

Statutory EBITDA rose 22.2% to A$202.3 million from A$165.5 million, while normalised EBITDA increased 11.7% to A$225.6 million from A$202.0 million.

Bega returned to statutory profitability, recording profit after tax of A$54.8 million compared with a loss of A$8.5 million in FY25.

Normalised profit after tax increased 35.8% to A$69.0 million, while normalised Earnings Per Share rose to 22.6 cents from 16.6 cents.

Branded Business Supports Earnings Growth

Branded normalised EBITDA increased 8% to A$220.7 million during FY26.

The division benefited from Volume growth across branded yoghurt, milk-based beverages and white milk. Demand for high-protein and other health-focused products also increased, supported by higher Marketing investment.

International revenue grew 12%, providing another source of growth beyond the Australian consumer market.

Savings from the completed exit from primary peanut processing also contributed to the Branded result.

Bulk Earnings Improve Further

Bulk normalised EBITDA increased 37% to A$53.2 million from A$38.7 million in FY25.

The improvement reflected greater integration of bulk ingredients into Bega's branded product portfolio, higher milk intake and a shift towards higher-value dairy ingredients.

Nutritional powder sales also increased, while the relationship between dairy commodity prices and farmgate milk prices was more favourable, particularly during the first half.

The division nevertheless remains exposed to movements in global dairy commodity prices and milk Supply conditions.

Restructuring Moves Into Benefits Phase

Several major operational initiatives progressed through completion during FY26.

Bega completed the automation of its largest Warehouse at Laverton and consolidated cheese packaging and processing activities from Strathmerton into the Ridge Street Facility in Bega.

The group also completed its exit from primary peanut processing, including the sale of the Kingaroy and Tolga facilities.

The warehouse and cheese-processing initiatives are expected to deliver savings during FY27, making execution of these anticipated benefits an important measure of operating performance.

Net Debt Rises but Leverage Remains Stable

Net debt increased to A$151.6 million at 30 June 2026 from A$126.1 million a year earlier.

The A$25.5 million increase reflected Bega's capital Investment program and A$37.1 million of restructuring payments, primarily associated with manufacturing rationalisation.

Despite higher absolute debt, the normalised EBITDA-to-net-debt Leverage Ratio remained at 0.8 times, unchanged from FY25.

Bega declared a fully franked final Dividend of 7.5 cents per share, taking total FY26 dividends to 14.5 cents per share.

FY27 Guidance Points to Further Earnings Growth

Subject to normal trading conditions, Bega expects FY27 normalised EBITDA of A$240 million to A$245 million.

At the midpoint, this would represent further growth from the A$225.6 million reported in FY26.

Management expects benefits from warehouse automation and cheese-processing consolidation, continued marketing investment and demand for higher-protein products to support performance.

International expansion, particularly in Southeast Asia, also remains part of the growth strategy.

Bega has extended its longer-term strategic horizon to FY31 and is targeting normalised EBITDA of more than A$310 million by that year.

Key Risks and Areas to Watch

Dairy commodity prices and farmgate milk costs can affect margins, particularly within the Bulk business.

The group must also convert completed restructuring initiatives into the expected cost savings without disrupting production or customer service.

Competition across branded food and dairy categories remains relevant, requiring continued product development and marketing expenditure.

Higher net debt following Capital Investment and restructuring is another consideration, although leverage remained unchanged in FY26.

Progress against FY27 EBITDA guidance, branded volume growth, Bulk margins and delivery of operational savings will be important indicators during the coming financial year.