Australian food company Bega Group plans to close its cheese processing and packaging facility in Strathmerton in Victoria.
In a statement issued today (6 May), the company said the phased closure, expected to be completed by mid-2026, will see Strathmerton’s functions transferred to the company’s Ridge Street site in Bega, New South Wales.
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Bega Group CEO Pete Findlay said: “As the business maintains its focus on delivering productivity improvement and growth, we continue to look at opportunities to simplify our operational footprint and invest for the future ensuring we maintain globally competitive infrastructure.”
The decision follows an “extensive review” and will impact approximately 300 employees with the change at the Strathmerton site.
Bega Group said it is “working closely” with the impacted workforce and will “support” them as they navigate the transition.
Findlay said: “We are very aware of the impact of this decision, and we are doing our best to manage this transition with care and respect for our Strathmerton employees and the local community.
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By GlobalData“Where possible, we will offer re-deployment to employees and continue to support them through this period.”
Bega Group stated that the consolidation of the operations is expected to generate A$30m ($19.4m) in annual cost savings by “eliminating duplication and lowering fixed costs”.
The company expects a non-cash impairment of between A$30m and A$40m related to the Strathmerton facility’s assets, including buildings, plant, equipment, and other assets.
Additionally, the cheese maker anticipates one-off cash costs in the range of A$30m to A$40m, primarily related to redundancy payments for affected employees.
To support the transfer of operations, the company expects to invest approximately A$50m in the Ridge Street site to ensure the facility has the necessary capability and capacity to take over the combined operations.
The investment at the Ridge Street facility is aimed at modernising its cheese processing and packing capabilities and is expected to create around 100 jobs in the Bega Valley.
The modernisation of the Ridge Street site will be funded within the company’s normal capital expenditure programme.
Once the consolidation is fully complete, Bega Group anticipates an earnings per share improvement of two Australian cents.
The company said the consolidation move will not impact the supply of cheese products during the transition period.
Even after the closure of the Strathmerton site, Bega Group said it will continue to have a “strong presence” in Victoria, where it operates five manufacturing facilities located at Tatura, Morwell, Chelsea, Koroit, and Port Melbourne.
These facilities collectively employ more than 1,700 people.
The move follows a series of recent portfolio adjustments by Bega Group.
In August, the group signed a “binding agreement” to sell its juice extraction factory in Leeton, New South Wales, to local juice maker Grove Juice.
Bega Group engaged local advisory business Kidder Williams in June to explore the potential sale of a Queensland manufacturing plant in Kingaroy.
In February 2023, the group announced the closure of its milk manufacturing plant in Canberra, with production relocated to a site in Penrith, New South Wales.
For the first half of FY2025, Bega Group reported a 3% increase in revenue to A$1.78bn for the period ended 29 December 2024.
EBITDA rose by 27% to A$109.3m.
Earnings per share (EPS) grew by 14% year-on-year to 9.9 cents.
