Executive chairman, Barry Irvin, told investors at a meeting last Friday the year was “full of activity both in the dairy industry and Bega Cheese”.

He said the company was delighted to achieve a record profit and importantly, a record normalised profit.

“So our business operations, without corporate activity, continue to demonstrate an underlying strength and continue to perform well,” Mr Irvin said.

There was also a significant increase in share price, accompanied by a very significant increase in milk price, plus considerable investment has been made in the ongoing growth of the business, particularly in the infant formula and nutritional capacity area with the construction and commissioning of the canning and blending facility at Derrimut, Victoria.

Bega Cheese took on two major strategic initiatives during the 2014 financial year.

Its bid for Warrnambool Cheese and Butter Company Holdings Limited (WCB) in September 2013 began a process that was to hold a pre-eminent position in the Australian business community for the next six months and resulted in significant value creation for stakeholders.

“We saw a value creation opportunity but there is a point in all acquisitions where you have to reflect on whether that value will be creative beyond a certain price.

“Bega Cheese concluded that indeed for our business more value would be created by accepting the Saputo offer and receiving $99 million from the sale of the shares in WCB and generating significant profit for our balance sheet and moving on to the many opportunities we see in the Australian and international dairy industry, be they organic or otherwise.”

Mr Irvin said the WCB bid significantly lifted Bega Cheese Group’s corporate and industry profile, and its share price, a recognition of the value of the Australian dairy industry and Australia’s dairy assets.

The introduction of the milk sustainability and growth program, a $25 million investment, has also played an important role in the company’s recent success.

There is however, concern over the uncertainty created by Russian sanctions.

Mr Irvin said the decision to ban agricultural exports including dairy from the European Union, United States, Australia, Canada and Norway is bad news for the global dairy industry. 

“It doesn’t affect Bega Cheese in the immediate term too much as we only had very small volumes of product going to Russia and the year ahead was projected to be even smaller than the last,” he said. 

“However, global dairy prices are going to be affected and obviously this will ripple to Australia.”