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).
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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It 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.