It’s an Aussie icon, nay, a national treasure. Perfect with a smattering of butter on 80c white bread, or with cheese and crackers.
I’m talking about the yummy, rich, weirdly addictive Vegemite.
Invented by chemist CP Callister in 1923 as an alternative to British Marmite, Vegemite has become a staple in many Aussie pantries and is a defining symbol of Australia.
In 2017 Bega Cheese (ASX: BGA) made the strategic shift from a dairy goods business to a branded consumer goods business with the acquisition of the famous brand from Mondelez International, formerly Kraft Inc.
The spread has always been manufactured in Port Melbourne with the city even renaming the road that the manufacturing facility is located on from Cook St to Vegemite Way in celebration of the brand in 2016.
Bega is changing things up though, with the launch of an expression of interest campaign for the sale of the property at 1 Vegemite Way, Port Melbourne.
Fear not though, the Company is intending to lease back the facility, maintaining their facility where they create Vegemite, peanut butter and other products.
The decision to sell the facility comes after a few one-off costs incurred during the FY22 year put a dent in the balance sheet. COVID and floods in Northern NSW and Queensland saw supply chain disruption domestically whilst abroad, the Ukraine war and uncertainty around the China lockdown situation saw overseas interruptions. The Company estimates that the full year EBITDA impact of these will be in excess of $40 million.
The Company is forecasting a normalised EBITDA between $175 and $190 million. At of the conclusion of the first half of 2022 the Company had $250 million of working capital. Whilst their financial situation doesn’t seem dire to investors, the sale of their facility could be a sign of more to come and will ensure the long term viability of the Company at their current operating level.
Now someone get me some cheap white bread, butter and a knife.