Beston is just as upset about an unexpected $12.6m loss as you are
Food & Agriculture
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Diversified food producer Beston Global has blamed delays and increased costs for an unexpected $12.6 million full-year loss, following months of positive news about its new mozzarella factory.
The loss was 63 per cent worse than last year and Beston said it was “disappointing, especially against where we expected the company to be at this point in its development”.
The plant installation and commissioning was six months later than planned thanks to delays by the builder.
That caused a cascade of problems.
Two-thirds of cheese sales Beston had planned for the second half of FY18 did not occur.
While all the milk supply arrived as planned, this had to be diverted into the production of cheddar and other hard cheeses.
Cheddar typically requires between three and nine months’ maturation in storage before being able to be sold. That led to further problems including a shortage of stock for sale immediately, low levels of mozzarella by-products such as cream and whey, and all compounded by lower international cheddar prices.
Beston said that the overall impact of higher costs and lower sales blew the full-year profit out by $11 million.
Lower returns from its investee companies as well as its China channel, coupled with higher insurance premiums, also had an effect.
The news wasn’t all bad however, with the group’s revenue increasing 97 per cent to $48 million, and Beston chief Sean Ebert told Stockhead this morning that the future was bright.
“From July onwards the financials are very positive,” he said. “For a lot of last year we were a cheddar business, which had long working capital cycles, but now that we’ve shifted to mozzarella it’s only about 30 days to turn the products around.
“We’re seeing huge demand for mozzarella which is being driven by how functional it is; for example, it’s great with pizza.”
The company’s shares were flat on the news, sitting at 19.5c.
Beston has been contacted for comment.