Saputo reports 3.8% dip in Q1 net earnings

Canadian dairy company Saputo has reported that its net earnings fell 3.8% to C$121.8m ($121.5m) for the first quarter ended 30 June 2012, compared to C$126.6m ($126.3m) in 2011, due to challenging market conditions and a write down of its inventory in Argentina.

Revenues for the quarter increased 3.6% to C$1.69bn ($1.68bn), compared to C$1.63bn ($1.62bn) in 2011.

Earnings before interest, income taxes, depreciation and amortisation (EBITDA) totalled C$203m ($202.6m), down 3.1% from C$209.6m ($209.2m) in 2011.

The company noted that in the US the base price for cheese fell during the quarter, which affected the revenues, and weak market conditions contributed to a dip in EBITDA of C$14m ($13.9m).

Inventory at the firm’s Argentina unit was written down by C$2.5m ($2.4m) due to a drop in selling prices in the export market at the end of the quarter.

However, a better product mix of dairy ingredients offset challenging ingredients market conditions, which resulted in better revenues and EBITDA at its US and Canadian divisions, compared to 2011.

Saputo said that although it continues to face challenging conditions in the markets in which it operates, it plans to increase sales volume.

The company’s grocery products sector will seek to boost volume in snack-cake and frozen categories, with focus on increasing sales in the US market.

Saputo, which operates dairy products divisions in Canada, Europe, Argentina and the US, and a grocery products division, produces milk, cheese and some baked goods from nearly 50 facilities in North America, South America and Europe.