Saputo reports increase in Q3 net earnings

Canadian dairy producer Saputo has reported a rise of 15.8% to C$129.8m ($130.3m) in the third quarter of fiscal 2012, compared to C$112.1m ($112.5m) in 2011, influenced by improved efficiency and last year’s acquisition of Wisconsin’s DCI Cheese.

The Montreal-based company also said that higher exports by its division in Argentina and a favourable dairy ingredients market in Canada helped it to offset poor US results.

Revenues for the quarter ending 31 December 2011 increased by 17.1% to C$1.796bn ($1.802bn), compared to C$1.535bn ($1.540bn) in the previous year.

Earnings before interest, income taxes, depreciation and amortisation (EBITDA) accumulated to C$207.3m ($208m), up 8.5% from C$191.1m ($191.8m) year-on-year.

The company’s Canadian operations posted earnings of C$131.9m ($132.4m), up 5% from the previous year, while revenues crossed C$1bn ($1bn).

The company’s US operations posted a 17.9% increase in earnings to C$72.5m ($72.76m), which was less than expected, while acquisitions boosted revenues to C$722.7m ($725.33m), from C$502.9m ($504.73m) in the previous year.

Saputo’s grocery segment struggled, with profits dropping 25% to C$2.7m ($2.7m), and revenues declining 14% to C$5.2m ($5.2m).

For the nine-month period ended December 2011, revenues rose by 15% to C$5.227bn ($5.246m), from C$4.522bn ($4.538m) last year, while EBITDA was C$630m ($632.29m), up 6% from C$593.8m ($595.96m) in the year earlier.

The increase in revenues was mainly due to pricing actions taken by its Canadian and Argentinean divisions, growth in sales volumes and acquisition of Wisconsin’s DCI Cheese last March.

The company, which produces and distributes milk, cheese and some baked goods from nearly 50 plants in North America, South America and Europe, plans to further improve efficiencies and pursue growth internally and through acquisitions.

Saputo has also announced its plan to change its dairy structure, which will see its Canadian operations being separated from Europe and Argentina.

In 2011, Saputo had already acquired Fairmount Cheese Holdings, the parent company of DCI Cheese Company (DCI) for $270m, to complement its dairy products division and strengthen its presence in the specialty cheese category in the US.

Saputo, headquartered in Saint-Leonard, Canada, has operations primarily in Canada, Europe, Argentina, and the US, and sells branded and private label products to retail customers.