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Saputo eyes further efficiencies following flat Q3 results

By Mark Astley , 14-Feb-2013

Canadian dairy giant Saputo has announced plans to pursue “additional efficiencies and decrease costs” across its business after announcing only marginally improved profits for the last three months of 2012.

The Quebec-based dairy processor produced only slightly higher profit and revenue for quarter ended 31 December 2012. Net profit for Q3 fiscal year (FY) 2013 hit CAD$130m – a 0.2% increase on the CAD$129m reported by Saputo in Q3 FY 2012.

Revenue for the three month period increased by the same margin – from CAD$1.797bn in Q3 2011 to CAD$1.801bn this time.

Saputo attributed the slight revenue and profits increase to a higher average US cheese block price, and higher selling prices implemented to offset the high cost of raw milk.

Saputo intends to implement cost-cutting measures across its Canadian, US, European and Argentinian divisions in an effort to remain competitive despite pricing issues.

Improve efficiencies, pursue internal growth

“Our goal remains to continue to improve overall efficiencies and pursue growth internally and through acquisitions,” said Saputo in its Q3 financial results.

Saputo’s Canadian, European and Argentinian divisions (CEA) reported revenue of CAD$1.057bn for the quarter – an increase on the CAD$1.009bn reported in Q3 FY 2012. Earnings before interest, taxes, depreciation and amortisation (EBITDA) hit CAD$128.1m for the period – up from CAD$121.9m.

In Canada, Saputo intends to continue to seek out “additional efficiencies” in an effort to cut costs.

“The Dairy Products Division (Canada) continues its investment strategy in product categories that offer growth potential, namely speciality cheeses and value-added milk products. Also, efforts to pursue additional efficiencies and decrease costs will be maintained by a continual review of overall activities,” said the company.

In Argentina, Saputo intends to “improve overall efficiencies” in an effort to remain competitive with selling prices in the export market.

“Optimise” US coast-to-coast service

In the US, Saputo hopes to build on its January 2013 acquisition of Dean Foods’ Morningstar division, which produces a variety of dairy and non-dairy extended shelf life products under a range of private label and owned brands.

“This acquisition complements the activities of the Dairy Products Division (USA),” said Saputo.

“The Company will benefit from Morningstar’s national manufacturing and distribution footprint and will optimise coast-to-coast service. We will evaluate these operations to seek further improvements, synergies and market opportunities,” it added.

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