Saputo’s earnings slide 4.6 per cent as U.S. cheese, butter prices hit revenues
Company also faced headwinds in Canadian dairy ingredients market
MONTREAL—Faced with falling butter and cheese prices south of the border, lower returns in the dairy ingredients market in Canada and higher administrative costs, Saputo Inc. recorded lower adjusted earnings for the second quarter of fiscal 2016. The company’s earnings totalled $148.6 million, decreasing $7.1 million from the same quarter last year, or 4.6 per cent.
The company said falling dairy prices in the U.S. shaved $229 million off its bottom line, though some of that lost revenue was made up for through higher cheese sale volumes, decreased ingredients costs as well as better efficiencies. Overall the company’s revenue increased 3.4 per cent to $2.8 billion for the quarter.
The Montreal-based dairy’s Canadian operations also recorded lower earnings due to a weaker dairy ingredient market, higher administrative expenses during the quarter and the disposal of its Bakery Division last year.
Despite the “unfavourable” market conditions, the company did get a boost from the low Canadian dollar. The exchange provided Saputo with a revenue boosts of approximately $292 million, as well as a $27 million earnings windfall.
Among other highlights for the quarter was Saputo’s acquisition of goat cheese maker, Woolwich Dairy, for approximately $80 million.