Australian food company Bega Group has announced plans to close its cheese processing and packaging facility in Strathmerton, Victoria.
In a statement released on May 6, the company confirmed that the phased closure, expected to conclude by mid-2026, will see operations transferred to its Ridge Street site in Bega, New South Wales.
Bega Group CEO Pete Findlay stated, “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.”
This decision follows an extensive review and will affect approximately 300 employees at the Strathmerton site.
Moreover, Bega Group emphasized its commitment to the impacted workforce, stating they are “working closely” to support them through this transition.
Findlay added, “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.”
“Where possible, we will offer re-deployment to employees and continue to support them through this period,” he continued.
The company expects this consolidation to yield A$30 million (approximately $19.4 million) in annual cost savings by eliminating duplication and lowering fixed costs.
Bega Group anticipates a non-cash impairment between A$30 million and A$40 million related to the assets of the Strathmerton facility, which includes buildings, plant, equipment, and other assets.
Additionally, the cheese maker foresees one-off cash costs in the range of A$30 million to A$40 million, primarily related to redundancy payments for affected employees.
To facilitate the operational transfer, the company plans to invest roughly A$50 million in the Ridge Street site, ensuring it possesses the necessary capability and capacity for the combined operations.
This investment aims to modernize the Ridge Street facility’s cheese processing and packaging capabilities, expected to create around 100 jobs in the Bega Valley.
Funding for the Ridge Street facility’s modernisation will be sourced from the company’s normal capital expenditure programme.
Once the consolidation is fully implemented, Bega Group anticipates an earnings-per-share improvement of two Australian cents.
Importantly, the company confirmed that cheese product supply will remain unaffected during the transition period.
Following the closure of the Strathmerton site, Bega Group will retain a strong presence in Victoria with five manufacturing facilities located in Tatura, Morwell, Chelsea, Koroit, and Port Melbourne.
Collectively, these facilities employ over 1,700 people.
This strategic 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 also engaged local advisory business Kidder Williams in June to explore the potential sale of a Queensland manufacturing plant located in Kingaroy.
In February 2023, the group announced the closure of its milk manufacturing plant in Canberra, relocating production to a site in Penrith, New South Wales.
For the first half of FY2025, Bega Group reported a 3% increase in revenue to A$1.78 billion for the period ending December 29, 2024.
Furthermore, EBITDA surged by 27% to A$109.3 million, while earnings per share (EPS) rose by 14% year-on-year to 9.9 cents.
