Saputo’s Q4 profit surges to $119.8M as acquisitions offset declines in Canada
MONTREAL – Saputo, the country’s largest cheese and dairy processor, plans to offset its lower profits in Canada by seeking out more growth opportunities overseas and in the United States.
“The company intends to accelerate growth in Australia, by making necessary capital investments and devoting resources to increase manufacturing capacity, grow milk intake and create new opportunities,” said Saputo, following the release Thursday of its latest quarterly results.
The Montreal-based company said it benefited during the fourth quarter from higher block cheese prices in the U.S., a lower Canadian dollar and increased international volumes and prices, which offset higher costs in Canada.
Saputo said it will continue to pursue sales volume growth in existing markets, develop additional markets from its expanding operations in Argentina and expand exports from the United States.
While the drive for lower costs at home will continue as it seeks to grow volumes of basic and specialty-type cheeses, along with higher margin flavoured milk
“In fiscal 2015, the company intends to continue to improve its efficiencies, while remaining committed to producing quality products, innovation and internal growth,” the company said.
The latest earnings, which included the operations of Australia’s Warrnambool Cheese and Butter, acquired in January, along with another merger in the U.S., helped Saputo cap off a strong year by boosting net earnings by more than 19 per cent to $119.8 million in the final quarter of its fiscal year. It earned 61 cents per diluted share for the period ended March 31, compared to 51 cents or $100.5 million a year earlier.
Excluding one-time items, Saputo’s (TSX:SAP) adjusted earnings attributable to shareholders were $151.9 million or 78 cents per diluted share. That was four cents better than analyst forecasts and up from 65 cents per share a year ago.
Revenues were $2.49 billion, up 21 per cent from $2.05 billion in the fourth quarter of 2013.
The Canadian division’s pre-tax operating profits (EBITDA) decreased 8.6 per cent to $108.9 million, despite higher revenues at $881.4 million. Higher ingredients and operational costs offset increased sales volumes, in both retail and food service segments.
Saputo is consolidating its distribution activities at a Montreal new facility and has announced plans to close three facilities across the country that will result in about $8 million in annual savings, of which $6 million should start next fiscal year. It will also evaluate cost-saving opportunities from its recent acquisition of Scotsburn dairy in the Maritimes.
The company’s U.S. division earned $128.2 million on $1.22 billion of revenues, compared with $103.1 million on $971.3 million of revenues in the prior year.
International profits, helped by its recent acquisition of Warrnambool Cheese and Butter, soared to $40.5 million from $7.5 million as revenues grew 70 per cent to $384.5 million.
Irene Nattel of RBC Capital Markets said Saputo closed out the year “with a bang.”
“The outlook for fiscal 2015 suggests continuing pressure in the Canadian segment, but favourable outlook for both U.S. and international,” she wrote in a report.
For the full year, Saputo earned $534 million or $2.70 per diluted share, up from $481.9 million or $2.41 per share in 2013.
Adjusted profits attributable to shareholders for the full year were $566.1 million or $2.87 per share. That compared to $510.6 million or $2.55 per share in the prior year.
Saputo is the largest dairy processor in Canada and one of the top 10 in the world. It produces, markets, and distributes a wide array of dairy products that are sold in more than 40 countries under various brand names.
On the Toronto Stock Exchange, its shares fell 23 cents to $58.86 in mid-afternoon trading on Thursday.
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