Bega Group to wind down Peanut Company of Australia
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The news: Bega Group will wind down and close its peanut processing business, Peanut Company of Australia (PCA), following a year-long review of the struggling subsidiary.
The numbers: Bega, owner of Vegemite and Bega Cheese, said it will oversee a phased shutdown of PCA's facilities at Kingaroy and Tolga in Queensland over the next 18 months.
PCA has been incurring annual operating losses of between $5 million and $10 million. Bega said that the shutdown will stem those losses, but anticipates one-off closure and redundancy costs of up to $10 million.
PCA's 150 employees will be offered redundancies, support services and redeployment opportunities where possible, the company said.
The context: Bega said PCA had been under sustained financial pressure for several years, prior to its acquisition by the group in 2017. Continued financial losses and industry challenges led to the launch of a strategic review last year.
The review concluded the business would be better served by a change to more local and focused ownership, or a closure should that not be achieved.
Bega noted that Australia's peanut industry is facing a combination of headwinds including increased competition from imports, stronger returns for growers from other crops, high input costs and declining production.
What they said: "We announced the strategic review over 12 months ago and we have pursued several options to sell the business," said Bega's chief executive Pete Findlay.
"Unfortunately, we've been unable to secure a buyer that could sustain a long-term future for employees and growers."
The source: ASX
