February 10, 2014

Saputo reports nearly 11% net profit increase in Q3 fiscal year

 

 

 

On a boost in revenues mainly resulting from a large acquisition in the US, Canadian dairy processor and cheese maker Saputo Inc. says its net profit increased nearly 11% to US$144.1 million in the third quarter of its fiscal year.

 

Saputo said it earned US$0.73 per diluted share for the period ended December 31. That's up from US$0.65 per share a year earlier when it earned US$130 million. Revenues were US$2.34 billion, up 30% from US$1.8 billion a year earlier.

 

The company was expected to earn US$0.74 per share on US$2.26 billion of revenue, according to analysts. It said its results benefited from higher selling prices and sales volumes in Canada and international locations outside the US. The fluctuation in the Canadian dollar and the Argentinian peso increased revenues by US$21 million. Its earnings before interests, taxes, depreciation and amortisations (EBITDA) increased 22.4$% to US$260 million.

 

Its US operations were the biggest contributor to the growth as the segment profits increased 50% to US$121.1 million, largely due to the acquisition of Morningstar Foods on January 1, 2013.

 

Revenues nearly doubled to US$1.14 billion, from US$663.6 million a year ago despite lower cheese sales volumes and the negative impact of the lower average block market per pound of cheese.

 

Saputo's international operations earned US$22.8 million on US$249.5 million of revenues. That compared with US$8.3 million on US$199.1 million of revenue a year earlier.

 

The Dairy Division (Canada) continues to seek volume growth in the cheese and fluid milk categories, including the value-added milk category, which offers high potential for growth. The division will pursue investments in product categories, such as specialty cheeses, with the intention to maximise exposure across Canada through its coast-to-coast distribution capabilities.

 

The property, plant and equipment investments in certain of the Canadian facilities, announced in March 2013 as part of the fiscal 2014 plant consolidation initiative, is moving along as planned. These investments are part of an overall objective to seek continual plant and warehousing efficiencies. In addition, the Company will continue to focus on increasing sales volumes in the snack-cake category in Canada and to develop sales in the US market.

 

The USA Sector continues to integrate the Dairy Foods Division (USA), seeking further improvements, synergies and market opportunities. The Sector will also pursue volume growth and evaluate opportunities in the specialty cheese category. Improved efficiencies in both manufacturing and distribution facilities across the US remain a priority in fiscal 2014.

 

The International Sector will continue to face challenges relating to the cost of milk as raw material, while remaining competitive with selling prices in the international market. The Sector anticipates that the price and demand for dairy products in the international market will remain at current levels until the end of fiscal 2014.

 

As at February 4, 2014, the company had obtained an interest in Warrnambool shares of 78.943%. The offer is currently scheduled to close on February 12, 2014. On January 17, 2014, the company announced that it had entered into an agreement to acquire the fluid milk activities of Scotsburn Co-Operative Services Limited based in Atlantic Canada. This transaction will enable the Dairy Division (Canada) to increase its presence in Atlantic Canada. The transaction is subject to usual closing conditions (including approval by the Canadian Competition Bureau) and is expected to close around March 2014.