Earnings slip at Saputo behind portfolio investment writedown

by Eric Schroeder
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MONTREAL — A stronger Canadian dollar and a C$10 million writedown on a portfolio investment contributed to a 18% drop in earnings at Saputo Inc. in fiscal 2006.

Net income at Saputo, one of North America’s biggest cheese producers, totaled C$192,102,000 ($172,532,000) in the fiscal year ended March 31, equal to C$1.83 per share on the common stock, down from C$232,145,000, or C$2.23 per share, in fiscal 2005.

Sales in the year rose 4% to C$4,022,210,000 ($3,612,000,000).

In the fourth quarter, earnings fell 37% to C$37,705,000, while revenue rose 6% to C$969,876,000. Saputo said fourth-quarter revenues benefited from higher Canadian sales in the dairy products sector, but revenue in the U.S. decreased.

The appreciation of the Canadian dollar offset the growth in revenue, the company said.

Operating income in the company’s Dairy Products segment totaled C$275,866,000 in the year and C$59,313,000 in the fourth quarter, which compared with C$320,286,000 and C$82,041,000, respectively, in the same year-ago periods.

EBITDA in the U.S. Dairy Products sector totaled C$78,300,000 in the full year, down 43% from C$137,043,000 in fiscal 2005. Saputo attributed the decline to a lower average block market per pound of cheese, a less favorable relationship between the average block market per pound of cheese and the cost of milk as a raw material. EBITDA in the fourth quarter fell 59% to C$12,753,000.

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