Saputo sales drop amid pandemic headwinds and falling dairy prices

MONTREAL – Global dairy giant Saputo Inc.’s profits fell in its most recent quarter as its results were compared to the surge in retail sales recorded at the start of the pandemic last year, the company said on Wednesday Montreal.

The cheese and dairy maker said it was also faced with falling prices in the international cheese and dairy market during its fourth quarter, and a continued decline in demand from restaurants, cafeterias and other catering customers.

“The effects of the pandemic, still present to this day, have persisted in our fourth quarter, as the continued evolution of consumer demand continues to affect all of our industries to varying degrees,” the chief told analysts. from the management and chairman of the board of directors of Saputo, Lino Saputo Jr. a conference call.

“Overall sales volumes were lower than in our fourth quarter of last year, which at the time coincided with the onset of the pandemic and the associated surge in retail demand,” he said. “International market prices were also lower than a year earlier, putting downward pressure on results. Foodservice operations remained below pre-pandemic levels, with the US sector primarily affected.”

Saputo, which ranks among the top three cheese producers in the United States, said market factors south of the border negatively impacted the company’s profits in the quarter ended March 31.

One of the problems was the slow recovery of the restaurant industry in the United States, which “has not come back with a vengeance,” said Carl Colizza, president and chief operating officer for North America. from Saputo.

“There is a significant amount – if not more than 10% – of catering businesses that have not reopened,” he said on the call. “It is a fact that we are going to have to deal with in order to move forward.”

Saputo’s U.S. division also faced a labor shortage, Colizza said.

“We have had challenges and continue to have challenges in terms of work, less around the impacts of COVID in terms of affected employees, but more of availability,” he said. “We are no different from many manufacturers today in the United States who struggle with… access and availability of labor.”

Meanwhile, Saputo’s two-hour conference call also shed light on its new strategic plan.

The plan, based on five key pillars, is expected to combine organic growth and strategic acquisitions to strengthen and grow the business over the next four years.

Last month, Saputo completed the acquisition of Bute Island Foods, a manufacturer, distributor and distributor of vegan cheese, and announced an agreement to purchase the Reedsburg, Wis. Plant from Wisconsin Specialty Protein, which manufactures ingredients like goat whey, organic lactose and other dairy powders.

“We still have a strong appetite to materialize acquisitions in markets where we believe they could complement our organic growth plans,” said Saputo, adding that the company’s two most recent acquisitions will help the company to be more diverse and resilient.

Saputo reported a profit of $ 103.1 million in the quarter, up from a profit of $ 88.7 million in the same quarter last year, as its revenue fell 7.5 for hundred. Profit was 25 cents per diluted share, up from 22 cents per diluted share a year ago, the company said.

Revenue for what was the company’s fourth quarter totaled $ 3.44 billion, up from $ 3.72 billion in the same quarter last year. On an adjusted basis, Saputo said it earned 30 cents per diluted share, up from adjusted earnings of 28 cents per diluted share a year ago.

This report by The Canadian Press was first published on June 3, 2021.

Companies in this story: (TSX: SAP)

The Canadian Press

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