Saputo’s annual revenue jumps 17% after three acquisitions

By Beth Newhart contact

- Last updated on GMT

Saputo has made five acquisitions in the last 13 months, bumping up its revenue. Pic: Getty/haurashko_ksu
Saputo has made five acquisitions in the last 13 months, bumping up its revenue. Pic: Getty/haurashko_ksu

Related tags: saputo, Cheese, financial report, Fiscal year, Pricing

Saputo Inc. reported its latest fourth quarter and fiscal year results, ending March 31. It completed a series of acquisitions last year that contributed to higher revenue, while low cheese prices and struggles with the Canadian dollar hurt overall earnings.

In the fiscal year ending in 2018 Saputo posted CDN $11.5bn in revenues, which increased by 17% to $13.5bn in 2019. However, its net earnings dropped by 11.4%, from $852.5m in 2018 to $755.3m in 2019.

Saputo said the increase in its numbers was mainly due to new revenue from acquisitions. It acquired Murray Goulburn in Australia on May 1, 2018, Shepherd Gourmet Dairy in Canada on June 19, 2018 and F&A Dairy Products, Inc. in the US on November 30, 2018.

On October 17, 2018, Saputo sold one of its facilities in Burnaby, British Columbia, generating $167.8m after tax. It also made some acquisitions just after the fiscal year’s end, with Dairy Crest Group in the UK on April 15, and Lion-Dairy & Drinks in Australia on April 26.

“Revenues were negatively impacted by lower international selling prices of cheese and dairy ingredients. Also, a lower average block market per pound of cheese and a lower average butter market price per pound decreased revenues by approximately $53m,” ​Saputo said.

“The fluctuation of the Canadian dollar versus foreign currencies decreased revenues by approximately $181m, mainly due to the devaluation of the Argentine peso.”

It cited ‘market factors’ in the US and the low international cheese and dairy ingredients prices for a $33m deficit in its adjusted EBITDA compared to last fiscal year. Higher warehousing and logistical expenses also factored in at approximately $91m.

Partnerships for the future

The fourth quarter mirrored results of the full fiscal year, with revenue up 17.9% and net earnings down 4.5%. Saputo pointed to the same factors, and also said “during the quarter, revenues were negatively impacted by lower sales volumes in Canada, mainly in the fluid milk category, due to competitive market conditions.”

Looking ahead to fiscal 2020, Saputo projected, “While benefiting from the contribution of other recent acquisitions, the company expects to continue to face headwinds primarily relating to the competitive market conditions in both Canada and the USA, the imbalance between supply and demand of dairy products in the USA, increased competition in the sourcing of raw milk in Australia, the volatile economic conditions in Argentina, continued elevated costs in warehousing, logistics and transportation, and the volatility in international selling prices of cheese and dairy ingredients.”

On Tuesday, Saputo announced the renewal of its partnership with the Grand défi Pierre Lavoie (GDPL), a non-profit organization representing one of the largest health movements in Québec. It will contribute more than $2.1m over the next four years

The money will fund two main healthy lifestyle events - a 270-km youth running relay ‘La Course’, as well as a 1,000-km cycling relay. Saputo has been working with GDPL for more than a decade to better the health of the people in the province of Québec.

Sandy Vassiadis, VP of communications and corporate responsibility at Saputo, said, "Saputo is delighted to renew this long-term partnership. We are committed to promoting healthy lifestyle habits for our employees and our communities, and the GDPL helps us deliver on this promise.”

Pierre Lavoie, founder of the GDPL, said, “Saputo has been with us since the beginning. Their support has been steadfast in helping us focus on our mission to get people moving. In 2018 alone, we had over 527,000 participants take part in our challenges and I am thrilled to further pursue our adventure towards a healthier Quebec with Saputo and their employees by our side."

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