'Mr Market' may have expected a reduction of NPAT and other...

'Mr Market' may have expected a reduction of NPAT and other financial metrics given the pressures on milk solids price per kilogram, but whether he foresaw such a dramatic decline will be answered in trading today and tomorrow. He's usually quick to punish bad news and slower to recognise anything positive.

BGA says it implemented 'unprecedented' price rises. As always, there was a lag: the supermarkets for instance typically take three months or longer to approve wholesale (and hence retail) price rises.

Provided the company is being honest and not clutching at straws, the outlook appears somewhat better. It would want to be. We may not have a repeat of the media-grabbing floods east coast Australia has seen, including in dairying regions in calendar 2022. BGA talks of the 'potential' for farm gate milk pricing to not be as adverse for the company in FY 24.

BGA has decreased market share in yoghurt compared to a year ago (i.e. PCP) from 26 to 24 per cent but growth overall across all companies selling was a very good 9.0pc. BGA has strong competitors such as USA-owned Chobani (Gippsland Dairy and its eponymous brand) but BGA products such as Dairy Farmers, Farmers Union and Yoplait have quite good shelf space in WOW/MTS' IGAs and COL among other outlets.

In fresh white milk, it has maintained market share of 13pc but a year ago, sector volume growth (again for all: BGA plus competitors) totalled minus 1.1 per cent. This has risen in 1H 23 to 7.0 per cent: surprising.

In the important spreads category where BGA has Vegemite and many types of peanut butter including Simply Nuts, BGA"s share of recorded sales rose from 31 to 32 per cent. The category overall had good growth of 4.8pc in 1H 23.

Overall sales of milk-based beverages(including competitors) grew an astounding 8.1pc.

As with spreads, BGA is the market leader in milk based beverages.

Chilled juice saw BGA's market share drop substantially from 28 to 22 per cent. The category across BGA and rivals grew a healthy 7.6pc.

BGA is also #1 in the least important by value category, water ices (Zooper Dooper and similar) with overall category sales rising an amazing 13.8 per cent.

The dividend is not covered by earnings but presumably BGA believes it is sustainable given its outlook.