Beston Global Foods (ASX:BFC) – lactoferrin & mozzarella producer
Beston Global Foods Limited (ASX:BFC) CFO and Acting CEO Darren Flew discusses the company's FY21 results, guidance and strategy, and provides an update on the company's lactoferrin expansion project at its Jervois dairy in South Australia.
Michael Luu: In today's talk, let's welcome CFO of Beston Global Food Company (ASX:BFC) Darren Flew. Darren, welcome to FNN.
Darren Flew: Thank you, Michael. Good to be here.
Michael Luu: Now, first off, can you start with an introduction to the company?
Darren Flew: Beston Global Food Company is a proud South Australian company. We're a multi award-winning dairy operation. Our principal products are dairy products, mozzarella, whey powder, cream, butter, and significantly a big increase in our lactoferrin production. The plant's just about to be commissioned. Our meat products out of Shepparton include diced and ground ingredients for other manufacturers, premium hamburgers and meatballs, and ready-to-eat meals, such as lamb shanks. The dairy business has grown significantly in the last few years, and now turns over about $100 million a year. And our meat operations in Shepparton, they currently turn over about $10 million per annum at the moment.
Michael Luu: Great. And Darren, you mentioned Beston has grown significantly over the past few years. How has this been achieved?
Darren Flew: The centre of our operations are at Jervois. The plant was commissioned in 2018. Before that, we did not produce mozzarella, but we did produce cheddar at the Murray Bridge factory. Producing mozzarella rather than cheddar allows the cream in the milk to be separated and sold separately. So, mozzarella-making, therefore, is actually a higher-value activity than cheddar-making. So, investing in the mozzarella plant — commenced back in 2016, but commissioned in 2018 — was a strategically significant decision for the company.
Michael Luu: A key focus has been expansion of lactoferrin production at your Jervois dairy. Can you elaborate on this?
Darren Flew: Firstly, lactoferrin. What is lactoferrin? Lactoferrin is a whey protein, which boosts the immune system. It has a strong antimicrobial, antivirus, antibacterial, antifungal properties, and is probably best known, if you have heard of it, for use in infant formula. There's a small amount of lactoferrin protein in milk. We extract about 130 kilograms of lactoferrin from every million litres of milk that we process. The lactoferrin at the end of the day is sold as a powder, so the liquid concentrate that comes from the extraction process is dried. It's either freeze-dried or spray-dried to meet customer specifications.
Michael Luu: Now I'm also aware that you have an expansion project for lactoferrin. Can you give us an update on this project?
Darren Flew: The lactoferrin is extracted from milk, from skim milk, and we installed some milk handling upgrades and, importantly, two lactoferrin extraction columns over the last eight to nine months. The first phase of commissioning — we've already announced to the market –the first phase of commissioning, we were able to achieve a 95 per cent purity lactoferrin powder. That's a premium grade level of product available to sell into the market. I'm very pleased with how quickly we got to that level of purity. The remaining phase of the commissioning is actually focused on calibrating the process to ensure we maximise the yield of lactoferrin from the milk whilst maintaining the purity.
Michael Luu: Now, to finances and strategy. Could you walk us through your FY20 results and guidance?
Darren Flew: The first half of the year reflected the continued growth of the company that I referred to before. Milk supply increased by about 28 per cent in the first half of the year. Mozzarella production was up about 30 per cent to just over 5,500 tonnes. Lactoferrin production from our older lactoferrin facility, which is being decommissioned as part of this process, was about 640 kilograms. Revenues for the half year were $53 million up. And we actually reported a loss for the half year of $8.8 million from a number of operational issues at the Jervois factory in the first half, which have largely been resolved through the second half of the year. So, our operating guidance for the balance of the year reflects that continued growth through for the full year of FY21.
Michael Luu: Fantastic. Lastly, before we let you go, is there anything else you'd like to add?
Darren Flew: Really to sum up, Michael, we've been very focused these last 12 months on completing the lactoferrin project on time and on budget so that we enter FY22 with this important new revenue stream, additional revenue stream online. We've moved to 24/7 operations, as a sign of the growth, as we continue to grow into FY22. So, a great deal of effort has been put into ensuring that the plant reliability is improved, that issues that we saw in the first half of '21 were actually resolved. And, as we move into FY22, we're in a really good place to make sure that the fundamental changes that we've been making to the business over the last few years are complete, and we look forward to FY22 with a great deal of confidence.
Michael Luu: Darren Flew, thanks for your introduction to the company. And we look forward to touching base with you in the near future for further updates.
Darren Flew: Thank you, Michael.
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