Saputo scores higher earnings, sales in Q1

by Eric Schroeder
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MONTREAL — Saputo Inc. posted higher earnings and sales in the first quarter driven by contributions from the recently acquired Neilson Dairy business. Net income in the first quarter ended June 30 totaled C$84,821,000 ($79,320,000), equal to C$0.41 per share on the common stock, up 2% from C$82,963,000, or C$0.40 per share, in the same period a year ago.

Sales during the first quarter were C$1,446,434,000 ($1,352,669,000), up 6% from C$1,361,910,000 in the same period a year ago.

Within Saputo’s CEA Dairy Products division, which includes company interests in Canada, Europe and Argentina, operating income rose 11% to C$99,289,000 ($92,946,000) on a 25% gain in sales to C$945,650,000 ($885,244,000). Saputo said the sales gain primarily reflected revenues from Neilson. Other factors contributing to the sales increase were higher selling prices in Canada and additional sales volumes in the Argentinean Division and the Canadian Division fluid milk business.

The company’s U.S. dairy group posted operating income of C$28,264,000 ($26,477,000) in the first quarter of fiscal 2010, down 19% from C$34,851,000. U.S. dairy sales also fell 19% to C$458,600,000 ($429,563,000). The decrease was primarily due to a significantly lower average block market per lb of cheese. At $1.19 per lb, the average price was 79c per lb lower than the average during the same period a year ago, Saputo said. Also adversely affecting revenues were a less favorable dairy ingredients market and lower sales volumes.

Operating income in the Grocery Products division, which includes the company’s bakery operations, totaled C$2,553,000 ($2,391,000), down 25% from C$3,392,000 in the same period a year ago. Net sales were C$42,184,000 ($39,515,000), nearly unchanged from C$42,395,000 in the first quarter of fiscal 2009.

Looking ahead, Saputo said it is integrating the Neilson operations acquired last December and is implementing various initiatives to maximize its partnership with the 2010 Vancouver Olympic and Paralympic Winter Games. The company also said it intends to evaluate the activities of F&A Dairy of California, which it acquired on July 20. Saputo said it hopes to improve operational efficiencies and identify possible synergies within its West coast facilities.

Within its Bakery division, Saputo said it is focused on developing two new lines of products geared toward lunch boxes and the frozen category. The products, which the company did not describe, are expected to be launched in the fall.

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