Saputo fiscal '07 income climbs 24%

by Eric Schroeder
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MONTREAL — Saputo Inc., the largest dairy processor in Canada, posted higher profits but lower sales in the fiscal year ended March 31. Net income in the year was C$238,467,000 ($224,357,000), equal to C$2.30 per share on the common stock, up 24% from C$192,102,000, or C$1.83 per share, in fiscal 2006. Sales in fiscal 2007 were C$4,000,980,000, down from C$4,022,210,000.

In breaking down full-year operations, Saputo said operating income from Canadian and other operations rose 24% to C$280,923,000 on a 5% gain in sales to C$2,794,099,000. Revenues benefited from higher selling prices in the company’s Canadian operations along with the increase in the cost of milk as raw material, increased sales volumes from Canadian fluid milk activities and Argentinean operations, additional revenues due to a more favorable byproduct market and the inclusion of German operations.

Operating income from the U.S. dairy products sector rose 10% to C$53,041,000, while sales in the unit fell 14% to C$1,036,830,000.

"Major strides were made during the fiscal year with respect to improved operational efficiencies, increased selling prices, and the reduction of the cost associated with milk handling," Saputo said. "The sum of these efforts resulted in approximately C$15 million improvement in EBITDA in fiscal 2007 compared to fiscal 2006."

Operating income from the company’s grocery products division was C$20,252,000, down narrowly from C$20,738,000.

"Fiscal 2007 was an excellent example of Saputo aligning all its resources and facing the challenges head on," the company said. "Our divisions were successful at creating additional value for all stakeholders. As we enter fiscal 2008, the momentum created in the prior fiscal year along with our focus and dedication should allow us to achieve even greater heights.

"The acquisition of the activities of Land O’Lakes West coast industrial cheese business completed at the beginning of fiscal 2008 will significantly increase our presence in the U.S. market. The additional scale as a result of this acquisition should create many opportunities to improve our profitability. Part of the fiscal 2008 objective is to analyze our new operations and integrate them within the Saputo culture and values, and improve profitability. We currently have dedicated teams in place to ensure this integration progresses efficiently."

Saputo said it will proceed with the integration of its U.K. operations, acquired in late fiscal 2007, and will use the acquisition, along with its German operation, "to gain a better understanding of the European market."

"Our objectives, with regards to our European operations will be to increase efficiencies, expand our client base, and improve overall profitability," Saputo said.

Among its other objectives for 2008, Saputo said its Canadian dairy operations "will continue to refine their operations in an effort to improve efficiencies."

The company’s grocery products sector’s objectives for fiscal 2008 will focus on the continued integration of Rondeau, acquired in early fiscal 2007, as well as increasing the areas where these products are marketed and sold, Saputo said. The closing of the Laval facility will allow the division to improve efficiencies and increase overall profitability, the company added.

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