Bega Cheese Limited (BGA) Earnings Call Transcript & Summary

Hello, everyone, and really lovely to have people join us in person despite the floods in the local valley and the fact that we've not been able to be together for a number of years now due to COVID. Look, before I do formally start, I noticed at the back of the room, I've got three of my favorite people Lucas, Debbie Elliott and Helen Peters, who worked for Bega Cheese for, I think combined, it would be close enough to 150 years, but a very, very, very, very long time, and they were always very, very kind and look after me through that entire period of time. Every time I would wander into the Bega office, they were familiar faces. So lovely to have them join me today formally. And I guess it is the opportunity because we haven't had the opportunity to be together to just acknowledge some of the deep history that is with some of our staff at Bega Cheese, and they, indeed, were with us when we just had one tiny little site on the -- at Lagoon Street in Bega and made a little bit of cheese, and so it is lovely to have them here today. Moving to the formalities. Welcome to Bega Cheese's Annual General Meeting, which is being recorded and webcast. As we have a quorum, I now declare the meeting open. When you registered this morning, you will have received an admittance card. For all shareholders and proxy holders who are voting, you should have received a yellow voting card. If you're a shareholder who is not voting, you should have received a blue card. If you're a non-shareholder, you will have received a red card. Yellow cardholders will be able to vote for or against resolutions and ask any questions they wish relating to the business of the AGM. Blue card holders will be able to ask questions but not vote. Red card holders are most welcome at the meeting but will be unable to participate in the proceedings. Further information regarding voting proceeds will be provided prior to the commencement of the resolutions to be put to the meeting. For the benefit of all attendees at this meeting, I would ask that you identify yourself before asking a question or making a comment. At today's meeting, we have a number of formalities to deal with, including this consideration of the group's 2022 annual report, the adoption of the remuneration report and the election of directors. I am pleased to welcome new shareholders and our long-term shareholders who know the company so well and have supported the strategy and directors of the company over many years. Let me introduce my fellow Directors, Patria Mann, Peter Margin, Terry O'Brien and Harper Kilpatrick. And offer the apologies of Raelene Murphy and Rick Cross. Rick is caught in Northern Victoria, obviously dealing with the extensive flooding up there at the moment. And unfortunately, Raelene couldn't be with us today. I am also pleased to welcome Anthony Goldsworthy and Sam Lobley representing our auditors, PricewaterhouseCoopers. They're over there. Our legal counsel, David Ferguson from Addisons and Julie Stokes from Link Market Services Limited and a number of Bega Cheese staff. Are there any other apologies? Thank you. We'll now move to the formal part of the meeting. I will present the financial year 2022 annual report with Bega Cheese CEO, Paul van Heerwaarden. I am pleased to be presenting the results for Bega Cheese Limited for the 2022 financial year. A year of extraordinary volatility and upheaval, I am particularly pleased that despite the upheaval we have been successful in executing a number of key strategic initiatives and continue to grow and develop the company. I would describe FY2022 as a solid financial performance in what was a very challenging environment. It is the first time that the Company has exceeded $3 billion in revenue, which is obviously a milestone for the organization and reflects the growth and acquisitions that the company has made over the past decade. A normalized earnings before interest, tax, depreciation, and amortization of $180.1 million and the statutory EBITDA of $149.9 million in the context of the circumstances we were operating in is a satisfactory outcome. Particularly pleasing is the strong operating cash generation of $158 million, which of course then allowed us to reduce debt and make further investments in the business. In the financial year 2022, we reduced debt by $60 million meaning that our leverage ratio was down to 1.8. Bega Group has now owned Lion Dairy and Drinks for a little over 18 months. The integration of the Lion Dairy and Drinks business which we now refer to as Bega Dairy and Drinks has been executed as planned and the synergies that we expected to achieve have been achieved. The Bega Dairy and Drinks business brought a strong portfolio of market leading brands to our Company and importantly significantly contributed to the strategy of our transition to becoming a leading branded food company. Many of the brands in our portfolio hold Number 1 or Number 2 status in the market and indeed some are truly Australian icons. I am pleased to report that despite the volatility of the market, the position of our brands remains strong. Paul will provide more details on brand performance in his report. In FY 2022, we saw marked increases in global dairy commodity prices and while they had declined in recent months that decline has largely been offset by the depreciation of the Australian dollar. The strength of commodity prices has benefited our dairy ingredients business and we are now seeing those prices being reflected in the Australian market. We continue to progress our sustainability programs with a number of initiatives implemented as a priority as we work towards reaching our emission targets and executing the Bega Circular Valley Project. As mentioned in my opening comments, the business experienced multiple disruptions in FY 2022, there was significant direct COVID-19 costs which Paul will outline in a little more detail in his presentation. There were also some consequential impacts from COVID-19 disruption which created greater difficulty in managing other unpredicted events such as the floods in Central Australian and Northern NSW. Australian farm gate milk supply in 2022 financial year reduced by approximately 4% and competition for milk remained very strong and this continues to be the case. Farm gate milk prices strengthened in both the 2022 financial year and again in the 2023 financial year reflecting improved international commodity prices, subsequent price increases in the Australian market, limited supply and overcapacity in milk processing and manufacturing infrastructure. Bega Group continues to ensure that it is competitive in farm gate milk procurement and have secured the milk supply we require for the coming year. Moving to the next slide. Many people may have observed that we have refreshed our corporate presentation and purpose. We now refer to the Company as the Bega Group. We are, of course, very proud of our origins and the Bega brand and the Bega region remains the heart of the company. The company now extends far beyond cheese and far beyond the valley and now includes wonderful brands such as Vegemite, Dairy Farmers, Pura, Dare, Farmers Union, Juice Brothers and many other Australian favorites. After many years of successful growth and acquisition, we thought it was appropriate to now refer to the company as the Bega Group, recognizing the expansion of the company while still remembering where the home of the company is. We have endeavored to combine the heritage of the past in our future with our purpose of creating great food for a better future. This slide is one that many of you will be familiar with, and I won't dwell on it too long except to say that as I speak to you today, our long-term strategy of creating a balanced business with an integrated supply chain that allows the company to respond effectively to changes in both the Australian and international market and in branded and commodity sectors is very well progressed. And for the first time in the company's history, there are no significant gaps in our capacities or capabilities. While there have been some challenges over the past 12 months, a number of which remain with us, the strength and resilience of the business has been well demonstrated, and we continue to identify a number of opportunities for business growth and performance. Paul will speak on the financial performance of the business in more detail, in overview and as mentioned earlier, the financial year 2022 is the first year the company has exceeded $3 billion in revenue. And perhaps even more importantly, 82% of our revenue is from the branded segment of our business. The normalized profit after tax for the year was $46.3 million, with statutory profit after tax being $24.2 million. I've spoken regularly about our sustainability programs and have initiated and led our circularity project, which encompasses the entire Bega Valley at its community and is recognized as a leading project in the circularity space. In terms of the Bega Group, we have previously announced our commitments for carbon targets and Scope 1 and Scope 2 emissions and are working on implementing programs to ensure those commitments are met. As we implement the programs to achieve a 50% reduction in emissions intensity by 2030 for Scope 1 and 2 emissions, we will also focus on Scope 3. In FY 2023, we will be focused on compiling data and information on Scope 3. The circularity project will be part of what informs us in terms of how we deal with and manage Scope 3 emissions into the future. Thank you for your attention on this part of the presentation. I will shortly hand to Paul -- to CEO, Paul van Heerwaarden to provide a more detailed review of FY '22 and return to answer questions at the completion of the AGM. Before I do this, and some of you may be aware that we announced this morning that this will be Paul's last AGM as CEO. Paul has been a wonderful CEO for Bega Cheese and has led the organization through a period of great change and development always giving his all to deal with challenges and execute opportunities. Paul remains committed to the company, and as always, is keen to ensure the best outcomes for the business and that the transition to a new CEO is well planned and continues the stable leadership, which has always been a key element in the success of the organization. Paul has worked for the company for 13 years in a number of executive roles and will reach 6 years of service as CEO in January 2023. While Paul's achievements are many, I would highlight the key role he has played in the acquisition of the Mondelez Grocery Business in Australia, more specifically in owners bringing home Vegemite, the reshaping of our dairy nutritionals business through the execution of the various Reckitt's transactions, the acquisition of our facilities in Koroit, the acquisition of Lion Dairy and Drinks and his leadership on the diversity and inclusion programs of the combined group. One of the features of Paul's leadership has been his willingness to give opportunity to others and his capacity to develop people. Paul is always keen to recognize the capacity and capabilities of individuals and his team. Earlier this year, we announced that Pete Findlay, had been appointed Chief Operating Officer of the company, and the Board is now pleased to announce that Pete will transition to the CEO with Paul's support over the coming months. I'll have much more to say about Paul over those coming months. It will all be good, Paul. And -- but I'm now really pleased and I'm sure you'll all join me in congratulating Pete on his upcoming role as well.

Good morning, everyone, and thank you, Barry, for those kind words. Whilst this might be my last AGM as CEO, let me say, it's a wonderful business with wonderful people, a number of who are here today. Good to have Barb and Pauline [joined us Helen], we would have been up to 250 years for the 5 of you, I think. But unfortunately, they couldn't be with us here today. And also just slightly [indiscernible], Barry is one of my colleagues, John Hudson, sitting here from my first job working in [networks] and blogger over 30 years ago was just popped out of nowhere. And so there's a bit of book ending going on here, which is great. So it's a pleasure working for the company. And while I still believe there's much more to be achieved, I also believe it's the right time to hand the leadership to others. I remain very positive about the opportunities for the company, which is well positioned for further success in the future. I know Pete has the capabilities, knowledge and values, that will ensure his success, and he has my full support as we transition in the coming months, and I know he has the full support of Barry and the Board. I'm pleased to be back in Bega delivering the AGM presentation in person. And my first slide outlines the major initiatives during FY '22. And from my perspective, it was pleasing to see the ongoing progress of important strategic projects despite a very challenging year in terms of disruption and unavailability of internal and external resources. Our key focus coming into FY '22 was to ensure that we realized the synergies from the acquisition of the Lion Dairy and Drinks business. While synergy realization was successfully executed, it's important to know that there are also other sizable projects, in particular, the transition from the Lion Group IT infrastructure to our cloud-based network, which was completed ahead of schedule and with minimal disruption in our operations. As we further integrate the business, we continue to see underlying growth in key categories, channels and markets despite the various disruptions throughout the year. We continue to invest in our digital platform and network infrastructure with ongoing automation and rationalization projects continuing to reduce our cost to serve and improve our service and delivery performance. The early termination of the record agreements announced last financial year were finalized during FY '22 with early termination payments received and a reset of our infant formula business, including entering new canning agreements. Our infant formula business has now stabilized following market disruptions for a number of our customers, particularly in the China market over the last couple of years. The rationalization of some of our processed cheese manufacturing lines across our Bega and Strathmerton facilities has provided increased efficiencies. Our processed cheese business continues to grow, particularly in export markets, and we're also identifying opportunities in the domestic market where processed cheese provides a lower retail price point compared to natural cheese in an inflationary environment. I should also note that our processed cheese manufacturing and technical capability has supported the launch of our plant-based cheese products, which while currently only small volumes will provide good growth in the coming years. I'll cover the various sustainability initiatives later in the presentation and note that we remain on schedule with major capital projects across our manufacturing logistics network. This includes large investments in sustainable packaging across our flavored milk business and also new and growing pack formats in the yogurt business. Moving to the next slide and the commercial overview, it is fair to say that the growth and new product innovation that we are very proud of through the year has been overshadowed by the impact of COVID-19, devastating floods across South Australia earlier in the year and Northern New South Wales and Queensland in March as well as global supply chain issues that we continue to closely manage. Each of the points on this slide will be covered further throughout the presentation. This next slide outlines our business model and the 2 segments that we report on. While we focus on growing and developing our core branded segment, our bulk segment continues to perform the critical role in supporting the branded segment with ingredients on a flexible basis throughout the year. As an example, during periods of channel disruption in the branded segment caused by the Omicron variant late last year, we were able to immediately divert milk from our fresh milk plants into our commodity plants and take advantage of strong international prices. This allowed us to maintain a profit focus for the upstream bulk segment, which remains an important part of how we manage and report the financial performance of the business. I'd like to share some observations on the 2 segments of our business. Focusing firstly on the branded segment, which obviously had strong revenue growth and earnings growth, reflecting our acquisition of the Bega Dairy and Drinks business. We were pleased to note that we did have good underlying revenue growth in all -- all of our categories in the BDD business with particularly strong growth in the yogurt and juice categories, which were all around the 3% growth rates. Our spreads business continues to perform strongly with Vegemite and peanut butter sales increasing by almost $10 million. We experienced good growth in natural cheese and processed cheese from our contract packing business while experiencing challenges in our cream cheese international business as we reach price points that were well beyond the capacity of some of our Asian markets. The bulk segment of the business was down a little in both revenue and earnings, reflecting a decrease in overall milk intake, changes in our infant formula business associated with the Reckitt's arrangements and decreased demand from other customers. We did benefit from the strong commodity price, particularly in both -- in bulk cream cheese and milk powders as commodity prices increased strongly, particularly in the second half of the year. There was a significant impact from COVID-19 costs in our business, which I will detail later in the presentation. In the reconciliation of our normalized result, there are 2 noteworthy items, which are the termination of the Reckitt's contract and the continued Bega Dairy and Drinks transaction costs. I'll not dwell on this next slide for too long. In brief, we were very pleased with the cash generation in FY '22, which enabled us to both continue to invest in the business and reduced debt by 18%. Our leverage ratio in FY '22 reduced to 1.8. An outcome reflecting strong receivables and inventory management despite the impact of significant COVID-19 costs on the business earnings. The company has a strong balance sheet, an extensive profit portfolio -- a property portfolio and an extensive profit portfolio as well and continues to investigate the potential sale of our Port Melbourne site. As mentioned, the business generated operating cash flows of $158 million. Capital expenditure, inclusive of the packaging and capacity projects I mentioned earlier in the presentation, amounted to $72 million and repayments of borrowings of $83 million, significantly improved our gearing. Included in the cash flow are dividend payments of $29 million and the proceeds of some minor property divestments amounting to $7 million. I'm sure, like me, many of our shareholders will be pleased if they never hear the words COVID-19-related costs here again. We've spoken on a regular basis about the direct cost of COVID-19 to our business in FY '22, which accelerated in the second half of the year and particularly impacted our branded business. To perhaps provide a little more color on the COVID-19 impacts, as an example, absenteeism peaked at around 30%, which put huge pressure on our facilities. We had a direct absenteeism costs predominantly reflected in our branded business of approximately $6 million. Additional rapid antigen testing costs of approximately $3 million. Facility shutdown cost of approximately $8 million in circumstances where we couldn't open factories or had to stop lines. It's also worth noting the impact of COVID-19 did create additional difficulties in managing other unexpected one-off events, such as the floods in Central Australia and Northern New South Wales and Queensland, which closed down rail access and amplified the already shortage of trucks and drivers. Overall, direct COVID-19 costs were in excess of more than $40 million in FY '22. And while there remains some supply chain challenges, we are pleased to see the impacts largely behind us. Reflecting on FY '22, I thought it may be appropriate to share my perspective on the transformation of the company over the last 5 years. This slide details our transformation from prior to 2017 as a commodity process and contract packer through to today where we are positioned as a diverse and growing multichannel integrated branded business operating across both international and domestic markets. I won't go into the detail on this slide, but I would like to draw your attention to the box on the left-hand side of the page and note that for many years, the profitability of Bega was driven by large long-term third-party packing contracts and an export dairy commodity business. Significant headwinds across both of those businesses required a change in our vision, which was to become a great Australian food company with a strategy focused on building a multichannel branded business. The middle box is a list of various acquisitions and other major initiatives that we have executed over the past 5 years. These acquisitions and initiatives were all about diversifying and growing our branded business and addressing the major headwinds we were facing into pre-2017. The divestment of some infant formula assets in 2017 and the closure of the Coburg cheese facility a few years ago were also necessary to rightsize our manufacturing network and align with market opportunities. Today, we are one of Australia's largest branded food and beverage companies. It's fair to say that we have to navigate a number of challenges as we have made this transition, including the impact of drought, bushfire and floods. I'll speak about the outlook for FY '23 later in the presentation, but note that the material spike in input costs did provide further challenges and has impacted us in the short term, but doesn't lessen the opportunity for future growth. This next slide demonstrates the transformation I was referring to in the previous slide and includes our longer-term sales growth chart, illustrating a 30-fold increase in sales from approximately $100 million 20 years ago to $3 billion in FY '22. The pie charts on the right-hand side of the page provides the increase in the proportion of branded sales over recent years and reflects the full year impact of the acquisition of the Dairy and Drinks business. The quality and market strength of our brands, including the growth in market share of our portfolio is well illustrated in this slide. As you can see, we are experiencing strong growth in most of our categories and maintain our market-leading positions. Yogurt continues to be a highly competitive category with each of our brands playing a key role in the overall portfolio. Our milk-based beverages led by Dare continue to grow as has Vegemite and our peanut butter range with new innovations, which I will cover on the next slide. Investment in our core brands increased during FY '22, including a number of activations across all categories and new product variations and pack formats, such as the new Squeezy Simply Nuts innovation. The launch of lactose free offers for Pura whole milk and our famous Farmers Union Iced Coffee in South Australia have performed very well. This next slide is an overview of our manufacturing network, which we've provided at many previous investor presentations and is worth revisiting for a moment. Our national network of manufacturing sites, along with our extensive chilled distribution network continues to support the growth of both our national accounts but also very importantly, our local business. We continue to see opportunities for rationalization and optimization across our own network and indeed across the industry. This slide includes the dairy export trend index, which is the red line, and our southern farm gate milk price trend, which is the green line. As expected, these two lines are highly correlated and also highly variable. You can see the low point of the dairy export trend index in the middle of the slide around May 2016 and the doubling of the index over the next 4 years. When COVID-19 emerged the index quickly plummeted by 40% only to rebound to new highs about 6 months ago. We have now included an additional index, the blue line, which represents the private label milk price index for the major grocers. This line is basically the dollar a liter milk that was introduced in January 2011, which remained flat over 7 years until the $0.10 liter drought relief payment was introduced. A subsequent increase introduced last year, followed by the more recent increase to $1.55 per liter for a 2-liter bottle has seen a cumulative 40% increase in private label milk prices since we acquired the Lion Dairy and Drinks business in January last year. I would say that this is really important -- a really important development and positions us well as the inevitable changes in the global commodity cycle occur in the coming years. We continue to report on our 5 focus areas for corporate social responsibility. In brief, we continue to progress improvement in the nutrition of our products, particularly our aim to reduce salt and sugar content. We have implemented a number of initiatives across diversity and inclusion, which is a personal passion of mine, including becoming a signature to the HESTA 40:40 gender diversity pledge. We are on track to achieve our targeted reduction in Scope 1 and Scope 2 emissions by 2030 and have commenced measuring our Scope 3 emissions, which represent a material component of our overall carbon footprint and have been dealt with as part of the sustainability and circular economy initiatives that Barry is leading. Packaging targets are also on track as we approach 2025, and our commitment to the National Packaging Covenant. And whilst water sustainability and the reduction of water usage across our manufacturing sites is also on track to achieve the 2030 targets that we have set. Before I hand back to Barry, I will confirm the earnings guidance that we have previously provided for FY '23, which was a normalized EBITDA in the range of $160 million to $190 million. As outlined in the guidance note, we had initially expected Victorian farm gate milk prices to increase in the range of 15% to 20% over FY '22 closing prices. Strong competition for milk through June and July resulted in further increases in pricing, which were approximately 30% higher than the closing FY '22 farm gate milk price. Coupled with other cost increases, for example, oil, resin, packaging, coffee and sugar, we have seen a significant year-on-year increase in costs will be partly offset by accelerating some of our cost-out and efficiency programs and increased returns from international dairy commodities. The overall net increase in cost is circa $350 million to $400 million, which is about $30 million to $35 million per month. During the first quarter, we have phased in price increases in market to cover these increased costs. The timing of this phasing of pricing in the first quarter was impacted by a number of factors. However, I'm pleased to report that we've now been successful in achieving price realization in the market, and this has now been reflected in the monthly financial performance of the business. Whilst the focus of the AGM is the business performance of FY '22, I'm sure many of you will be concerned for our dairy farmers and our staff, particularly in Northern Victoria, New South Wales who are being impacted by the current floods. As always, in times of crisis, our teams and colleagues step up and support one another and deal with the many and varied challenges. While we have had both staff members and farmers directly impacted by the floods, I'm pleased to say they're all safe. And from a business perspective, our processing facility in Tatura has been able to manage the impacts of multiple day power outages and the logistics challenge of collecting milk of farm and having it processed. I would not only acknowledge our team but also the teams at Fonterra and Saputo, who have assisted us in managing our milk supply in circumstances where we were unable to process it within our own infrastructure. We do not expect the impact from the floods to have a material financial impact on our business performance in 2023. Thank you. Barry.

Thank you, Paul. Reflecting on the 2022 financial year, I have to say that in a year where the challenges were many and the projects were many, I feel very comfortable with what has been achieved by the company and the leadership teams. I think it is a testament to the knowledge and experience of our people and the capacity and capability of our infrastructure that we have navigated what has been one of the most volatile periods in recent history and continue to position the business for the future. As Paul has outlined, our transition to a branded food company continues to be successfully executed. The important balance of the business we now have allows us to take advantage of commodity prices and global demand when that is appropriate while also having the comfort of the greatest stability that ultimately our branded business will bring us. I believe this positions us well to manage any headwinds, risks, geopolitical or market changes that may occur. We now have stronger underlying brand growth in a number of our key categories and are seeing a more settled market and a return to post COVID-19 conditions. Many of you may have noted the announcement regarding our joint venture with Vitasoy issued last week. We don't currently have any further update on that announcement. As mentioned in our release, Bega Cheese recognizes the growing market importance of plant-based beverages and products, and we'll assess its options to continue involvement in this sector if it's interest in Vitasoy Australia is acquired by Vita International. I think it is very important to note that the in-elasticity in pricing around white milk has now been changed in recent times, and we are seeing movements in white milk better reflecting both the cost of production for farmers and the alternate returns. There were indeed significant cost increases in late FY 2022, which we have discussed, and it is pleasing that we are now seeing those increases reflected in the market. We continue to observe that there are a great many further opportunities in business efficiency and cost-out programs. Whilst we have been happy with the integration of Lion Dairy and Drinks, or now Bega Dairy and Drinks and very happy with how the businesses are coming together. We do believe there are further opportunities for improvement in our business. In this very competitive farm gate milk procurement environment, I'm pleased to report that we have been able to secure the milk that we require for the year ahead and are comfortable about securing beyond the year ahead. I think that the reality is our long-term relationship with our farmers and our deep understanding of the issues that our dairy farmer suppliers manage assists us greatly in securing that supply. We continue to execute our sustainability and circularity initiatives, and they are something that, as Paul mentioned, particularly in the circularity space I continue to lead and have a direct involvement in. There continues to be a lot of discussion around both geopolitical risk and biosecurity risk, which is very appropriate. We work closely with government and industry on these issues to ensure that there is consistent and appropriate planning and response in the areas that can impact both the industry and the community. Ladies and gentlemen, if I was to summarize where we are today and our feeling about moving forward, I would say that we are a very diversified business, well positioned to respond to the various market scenarios, much of which has been demonstrated in the 2022 financial year and will continue to be demonstrated in 2023. We can be very comfortable that the infrastructure, the brands, the capability and the knowledge that we have in place is what is required to create value for our shareholders and other stakeholders. Ladies and gentlemen, that brings us to the end of the presentation. Are there any questions for Paul or I or any of the other team members to that? Brett, I'm aware that you have some that I might start with the audience first, if there any there.

[indiscernible] the local because [indiscernible].

That's all right. We'll give you a pass.

Peter. [indiscernible]. I'm sorry.

That's all right.

I've been a Vegemite kid ever since I was a kid. And also since I was employed by Kraft Foods in Port Melbourne in 1966. So that's a bit of a background. I would like to congratulate you on your report and where the company is going and all the rest of it. This isn't a question of where you're going and what are you doing, but it is a question of why the market doesn't see your share price reflective of what you're doing. For instance, July '18, the share was roughly $7.67. It opened this morning at $3.22. And also with respect to $3 billion, and congratulations once again, dividends in '16 were $0.095 a share, in ['22 $0.11] a share. So I'm just wondering what you see that the market is seeing. And I know you can't control it, but any of you guys got to comment.

Thanks for the question. I think I've got to be very careful in terms of, I guess, pining too deeply on, as you say, a decision that the market largely makes. I think it -- I think people are very aware that the market responds quickly to bad news and perhaps a little more slowly to longer-term strategic positioning. So we do know what's occurred in the last year, particularly in FY 2022, where we saw the price adjustments. One was, of course, the impact of COVID and how that was managed through the business. And as we've outlined, I think that has had a significant impact. And then that further impact of those very strong lifts in input costs, whether it be milk or whether it be other inputs that Paul outlined. I would probably make the comment that the market is -- tends to want to be sure that we are going to fulfill our strategic direction and put the numbers on the bottom line that they might expect. It's probably not appropriate for me to give an opinion on where the -- where I see the value of the share, but I think it is -- I think many people would say that the market tends to, as I say, responds very quickly to some of those news that impacts you in the short term and perhaps a little more slowly as you're outlining what your forward strategy is. I would probably like to say more that the reality is that I should limit what I say, given the position that I hold. Paul, I don't know if there's anything you would like to add to that, I think.

It is an important question, and I can repeat some things that Barry said. But if we look over the course of the last 2, 3 years, and it is really challenging because we're continually talking about these one-off costs and how long do you talk about one-off costs. The reality is over the last 3 years, with issues in milk supply decline, COVID costs and flood impact, the ability for us to recover those costs in pricing in the market has been really, really challenging for us. And we've started off this year, as I outlined in the presentation. We've got earnings guidance of $160 million to $190 million last year. Our normalized EBITDA of $180 million. We come into the year with cost increases of $350 million to $400 million. And it's our job to deal with that. I'm not shying away from that. But we start off $230 million under [indiscernible], and we have to work hard to actually get that back. And in a year like this year, we were still dealing with milk price increases well into July. And so the ability -- we can't go back to July 1 and reset those prices. So we -- you have a couple of months of not been able to get that price recovery. As I've said in the outline, we've got there as we've got into the sort of second quarter, and we've got good run rates. But the challenge is we weren't able to get that significant increase through supermarket pricing, through general pricing as quickly as those costs were coming in. As we've got, for example, a 13-week notification period with supermarkets. So we get cost increases. They come at us. So the challenge is there. We look at the charts with the dairy commodity prices and the price inflation. If we see that settling down and getting to a much better rhythm, we go into the second half and into next year with really, really positive run rates, okay? And we can't do much more than that. It's an unfortunate situation, but it's a situation we are at the moment.