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Saputo posts increased Q3 sales, slightly offset by decline in US dairy sector revenue

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Mary Ellen Shoup

By Mary Ellen Shoup+

03-Feb-2017
Last updated on 08-Feb-2017 at 16:49 GMT2017-02-08T16:49:16Z

Higher international selling prices of cheese and dairy ingredients increased quarterly revenues, Saputo said. ©iStock/Isaac74
Higher international selling prices of cheese and dairy ingredients increased quarterly revenues, Saputo said. ©iStock/Isaac74

Canadian dairy processor and producer, Saputo Inc., posted increased quarterly profits helped by a boost in international prices for dairy products. 

Saputo reported a 12.7% increase in net income, reaching c$197.4m (US$151.7m), up from C$175.2m ($134.6m), for the third quarter of fiscal 2017, ending Dec. 31, 2016.

“The increase is mainly due to higher sales volumes and higher selling prices related to the increase of the cost of milk as raw material in the Canada sector and the international sector. Higher international selling prices of cheese and dairy ingredients increased revenues, as compared to the same quarter last fiscal year,” the company said in a statement.

During the company’s recent earnings call, Saputo’s chairman of the board, Lino Saputo, said that priority will be placed on “improving operational efficiency” in order to mitigate current downward margin pressures, low growth, and competitive market conditions.

“As such, we completed the closure of our Sydney (Nova Scotia) plant in June 2016 and the Princeville (Quebec) plant in August 2016, and will close the Ottawa (Ontario) plant in December 2017,” Saputo said during the conference call.

From April 1, 2017, the company will be transferring all merchandising duties in the Atlantic region to retailers, which will cause the layoff of 190 employees who will be provided severance and outplacement support, Saputo said.

US dairy revenues down

Revenues for the US sector totaled C$1.537bn (US$1.18bn) for the third quarter ending Dec. 31, 2016, a decrease of approximately C$38m (US$29.2m) or 2.4%, as compared to C$1.575bn (US$1.21bn) for the same period last year.

Roughly half of the revenue decrease, C$16m (US$12.3m), the company said, can be attributed to the fluctuation of the average block market per pound of cheese and the butter market in the third quarter of fiscal 2017, as compared to the corresponding quarter last fiscal year. Additionally, an unfavorable product mix decreased revenues while sales volumes remained relatively stable.

Founder to retire this year

The founder of Saputo, Lino Saputo, announced his retirement effective August 1, 2017. He is handing his position as chairman to his son, who remains chief executive.

Lino Saputo Jr. has been CEO since his father handed over the position in 2004 — 50 years after founding the company in 1954.

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