Saputo becomes Australia’s ‘top dairy processor’, sees ups and downs for Mexico dairy tariffs

By Beth Newhart

- Last updated on GMT

Saputo has been busy acquiring companies including Murray Goulburn and Shepherd Gourmet Dairy, and is still looking to more acquisitions.
Saputo has been busy acquiring companies including Murray Goulburn and Shepherd Gourmet Dairy, and is still looking to more acquisitions.

Related tags Cheese Canada Finance

Saputo Inc. has released its annual financial report, revealing an increase in revenue following a string of acquisitions and comments on the recent dairy tariffs in Mexico.

The Montreal-based dairy giant saw a 3.4% increase in total revenues and a 16.6% jump in net earnings compared to their last fiscal year, but saw a hit of C$211m (US$161m) due to fluctuations of the Canadian dollar against foreign currencies.

Saputo Inc. acquired Florida-based Southeast Milk, Inc. in September 2017, and Wisconsin-based Montchevre-Betin, Inc in December 2017, and has continued to grow its portfolio in the new fiscal year.

Expanding the brand

Saputo made two major acquisitions in the last six weeks, closing on Australia’s Murray Goulburn on May 1 and announcing the purchase of Ontario’s Shepherd Gourmet Dairy on May 23.

The Murray Goulburn deal cements Saputo’s status as Australia’s ‘top dairy processor,’ according to CEO Lino Saputo.

“We’ve held a lot of town hall meetings, and we’ve been told by current suppliers as well as former suppliers to MG that this is where they want to bring their milk,”​ Saputo said in a conference call.

Saputo Inc. estimates a financial flexibility of upwards of C$3bn (US$2.3bn) for future acquisitions, including four to five they are currently considering.

“We will put that capital to work. Within this fiscal year we have the potential to materialize a few more acquisitions that I think are going to help platforms like Saputo Cheese USA,”​ Saputo said.

The company also plans to invest C$240m (US$183m) in a new facility in Port Coquitlam, British Columbia, within the next three years following the expected sale of its plant in Burnaby, BC, in 2019.

Seeing both sides of the tariffs

Mexico announced June 1 that new tariffs would be placed on several US exports, including cheese. A 10% to 15% tariff was proposed on June 5 and may be increased to 20% to 25% on July 5.

Saputo Inc. does not deal much in the Mexican market, but CEO Lino Saputo highlighted the positive and negative ways the tariffs could affect the company.

“Those [US] exporters will have a surplus in inventory. They may push that back into the US market, and there might be more competition in the US landscape. A downside for us would be that there is more competition in the US,”​ Saputo said.

“But we have other platforms, like Argentina and Australia, that could ultimately service Mexico for their cheese requirements. Perhaps there might be some great opportunity for us to find Mexico a decent market with us for a long time to come,”​ he said.

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