Sales from new acquisitions boosted gross revenue for Saputo in its third fiscal quarter, but one-time costs and market conditions in some sectors bit into the Q3 profits for Canada’s largest dairy processor.
Montreal-based Saputo, the world’s 15th-largest dairy processing firm, on Wednesday posted net earnings of $57.76 million on $1.52 billion in revenues for its Q3 ending Dec. 31, 2008, down from $82.02 million on $1.28 billion in the year-earlier period.
Offsetting the higher revenues was an inventory write-down of $12.9 million due to a “strong decrease” in the block market per pound of cheese at the end of Q3, and depressed international selling prices. (The average “block market” is the average daily price of a 40-pound block of cheddar on the Chicago Mercantile Exchange (CME), used as a base price for the cheese.)
As well, Saputo had to eat closure costs for its manufacturing plant at Hinesburg, Vermont worth $7.4 million, including $6 million in “non-cash” costs. Plus, Saputo’s year-earlier Q3 had included a one-time tax reduction to adjust future tax balances of about $6.5 million, due to reduced Canadian federal tax rates.
The company said its earnings before interest, taxes, depreciation and amortization (EBITDA) in its Canadian, European and Argentinean (CEA) dairy products sector was down about 9.3 per cent due to “less favourable byproduct market conditions in our Canadian operations,” offsetting a month’s worth of added revenues from its new Neilson Dairy operations.
EBITDA for Saputo’s U.S. dairy products sector was also off by 3.8 per cent on the lower average block market per pound of cheese and lower selling prices on the whey market. Those lower sales were offset by $141 million in new revenue from its Alto Dairy Co-operative acquisition.
Saputo on Wednesday also announced that effective Monday (Feb. 9), Claude Pinard, the president of its bakery division, will be its new executive vice-president for corporate communications and social responsibility.
Replacing Pinard as president and chief operating officer of the bakery division will be Lionel Ettedgui, formerly president of Ste. Hyacinthe-based Kooll Desserts, a dairy dessert manufacturer.