Australia’s Beston Global Food Co. is divesting its meat and plant-based business in a strategic “refresh” that will see it focus on dairy.
The dairy company cited “the sudden and dramatic escalation in inflationary pressures in Australia” for axing Provincial Food Group (PFG) in a statement released today (22 June).
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It is discontinuing and divesting PFG’s processing plant in Shepparton, Victoria, its water bottling production assets, land and water licences in Mt Gambier, South Australia, and its food-safety service Beston Technology.
“The decision will enable BFC to focus all of its resources and efforts on its dairy and dairy nutrition business where the company has built world-class capabilities and capacity,” the statement said.
It said the divestment “will enable BFC to focus on its most profitable and largest business segment and more easily weather the cost / price pressures impacting on the company (as with most other companies in our supply chain)”.
In a trading update in March, the company lowered its EBITDA guidance for the financial year 2023 from A$8-10m ($5.40-6.75m) to A$0-2m but insisted “the underlying performance of the business remains strong”.
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By GlobalDataIt raised sales guidance from A$150-180m, to A$170–190m.
It said it was working on “a number of high returning, short pay-back capex projects” in a bid to counter inflationary pressures and volatile whey protein prices.
Today the Sydney-listed company predicted its dairy business will make over $170m in the financial year 2023 and trading EBITDA of approximately $5m.
“The decision will enable Beston to accelerate our profitability, and our cash flows,” added Beston Global Food Co. CEO Fabrizio Jorge. He said the divestment “reflects the direct recognition of a need to play to our strengths as a value-add dairy processing and nutrition business”.
PFG manufactures meant and plant-based ‘meat’ products sold in retail and foodservice channels. It also supplies raw diced and minced meat to other food manufacturers.
Last year, Beston Global Food Co. mooted a long-term supply agreement with KCG Corp. in Thailand but the agreement hit a hurdle in September.
The deal would have seen Bangkok-based KCG take a 12% interest in BFC through the transfer of 100,000 shares priced at AUD10m. In return, KCG would distribute Beston Global Food Co.’s dairy, meat and plant-based proteins in Thailand.
