Net losses at Saputo Inc. increased to CA$518m in Q3 fiscal 2025 – a 318% increase over 2023’s CA$124m loss.
The effect of depressed dairy commodity markets, inflationary pressure and challenging consumer sentiment had all impacted the company, Saputo said in its financial results update.
Losses stood at CA$250m for the nine months ending December 31, 2024, down from a net profit of CA$173m for the same period in 2023.
Net losses per share (basic and diluted) in Q3 were CA$1.22 versus CA$0.29 a year ago.
The mozzarella major recorded a 17% revenue increase to CA$4.9bn and its highest adjusted EBITDA performance since 2023, at CA$417m, up 12.7%. Adjusted net earnings inched up to CA$167m with adjusted EPS at CA$0.39 in Q3.
Focus on share repurchases
Saputo’s shares have been trending down for the past 6 months and are trading at 24.14 CAD, down -17.89%, at the time of writing (February 10, 2025).
The company initiated a share buyback program in November 2024 in a bid to bolster the value of its remaining shares.
Back then, Saputo announced it may purchase 2% of its issued and outstanding shares for cancellation - but has now pushed that number up to 5%, effective February 11, 2025.
As of February 6, Saputo had repurchased 1,782,863 common shares at a weighted-average purchase price of CA$25.28, or around CA$45.07m.
“Saputo is increasing the number of common shares it can purchase under [the share buyback program] as it believes that, from time to time, the common shares may trade in price ranges that do not fully reflect their value.
“Given the company’s flexible balance sheet and expected cash generation, Saputo intends to focus its capital allocation strategy on share repurchases in the near term, to the extent the common shares trade at a discount from what management considers to be an appropriate value for the common shares,” Saputo said in a statement.
The company has withdrawn its previously disclosed long-term adjusted EBITDA aspirations and says focusing on share repurchases would be ‘a responsible allocation of cash’, having also hinted at efficiency optimizations.
Forward outlook
Saputo says that consumer sentiment, the rate of input cost inflation, commodity market and foreign exchange volatility and the supply chain environment would all factor in its FY25 performance.
“Inflationary pressures are anticipated to moderate versus the prior fiscal year. However, labour costs may remain elevated in addition to increases in marketing and advertising investments to support new product launches and our brands,” the company said.
“We expect USA dairy markets to progressively improve throughout the year, supported by a better balance between milk supply and dairy demand, but with continued volatility in the short to medium-term.
“Global demand for dairy products is expected to remain moderate, alongside subdued international dairy market prices due to macroeconomic conditions.”
Saputo expects an increase in contribution from optimization and capacity expansion initiatives in the US and continued margin recovery in Europe. The International Sector should benefit from lower overall milk prices in Australia, while Argentina will be operating under macroeconomic volatility, the company said.
