Saputo: released financial results for fiscal 2009

Montreal / CA. (si) Canadian Saputo Inc. released its financial results for fiscal 2009, which ended March 31, 2009. Net earnings totalled 278,9 million CAD or 1,35 CAD (basic) per share, down 3,2 percent compared to 288,2 million CAD or 1,40 CAD (basic) per share in fiscal 2008. Consolidated revenues totalled 5,79 billion CAD, an increase of 734,4 million CAD or 14,5 percent compared to 5,06 billion CAD posted in fiscal 2008. Consolidated earnings before interest, income taxes, depreciation and amortization (EBITDA) amounted to 547,8 million CAD, an increase of 21,8 million CAD or 4,1 percent compared to 526,0 million CAD in fiscal 2008.

Canada, Europe and Argentina Dairy Products Sector

EBITDA in the Canada, Europe and Argentina (CEA) Dairy Products Sector totalled 378,9 million CAD, as compared to 363,4 million CAD last fiscal year, an increase of 15,5 million CAD. This increase is mainly attributed to the acquisition of the activities of Neilson Dairy, the dairy division of Weston Foods (Canada) Inc., completed on December 01, 2008 (Neilson Dairy Acquisition), in addition to better efficiencies, including cost reduction initiatives in production, warehousing and logistics, and increased sales volumes from our Argentinean operations as compared to last fiscal year. EBITDA was negatively impacted by the unfavourable dairy ingredients market conditions. The EBITDA of the Dairy Products Division (Europe) was negatively affected due to lower selling prices in the market. The Dairy Products Divisions (Europe and Argentina) had an inventory write-down of 8,4 million CAD as a result of negative market conditions.

USA Dairy Products Sector

EBITDA in the USA Dairy Products Sector amounted to 152,0 million CAD, a 6,5 million CAD increase compared to 145,5 million CAD in fiscal 2008. The inclusion of the activities of Alto Dairy Cooperative, acquired on April 01, 2008 (Alto Acquisition), as well as the initiatives undertaken by the Company in prior and current fiscal years with regards to improved operational efficiencies and increased selling prices benefited the EBITDA. The decision by the United States Department of Agriculture (USDA) in the third quarter of fiscal 2009 to change the milk price formula also had a positive impact on EBITDA. These benefits offset increased ingredients, fuel and other costs during fiscal 2009. Also, the Sector incurred approximately 2,0 million CAD of rationalization charges in relation to the closure of our facility in Hinesburg, Vermont. A lower average block market per pound of cheese in fiscal 2009 in comparison to fiscal 2008 negatively impacted EBITDA, causing an unfavourable basis of absorption of our fixed costs and having an unfavourable impact on the realization of our inventories in fiscal 2009. In addition, the Sector´s EBITDA decreased due to an unfavourable dairy ingredients market as compared to the prior fiscal year. These decreases offset a more favourable relationship between the average block market per pound of cheese and the cost of milk as raw material. Also included in the EBITDA is an inventory write-down of 12,5 million CAD. Finally, the weakening of the Canadian Dollar added approximately eleven million CAD to the current fiscal year´s EBITDA.

Grocery Products Sector

EBITDA in the Grocery Products Sector amounted to 16,9 million CAD, a slight decrease as compared to 17,2 million CAD for the previous fiscal year. This decrease is mainly due to additional costs in an effort to support our brands, along with a decrease in sales volumes and higher ingredients, packaging, labour and energy costs. These factors offset the benefits from the selling price increase.

Cash flows generated by operations amounted to 467,3 million CAD for fiscal 2009, an increase of 176,2 million CAD compared to 291,1 million CAD in fiscal 2008. The Company increased long-term debt by 340,0 million CAD in relation to the Neilson Dairy Acquisition, repaid bank loans for 81,7 million CAD, issued shares for a cash consideration of 14,9 million CAD as part of the stock option plan, and paid 111,7 million CAD in dividends.

Summary of Fourth Quarter Results

Net earnings amounted to 69,2 million CAD for the quarter ended March 31, 2009, a decrease of 6,0 million CAD compared to the same quarter last fiscal year.

Revenues totalled 1,46 billion CAD, 194,2 million CAD or 15,3 percent higher compared to the 1,27 billion CAD for the same quarter last fiscal year. The increase is attributed mainly to our CEA Dairy Products Sector, whose revenues increased by approximately 158 million CAD in the fourth quarter as compared to last fiscal year. The inclusion of the Neilson Dairy Acquisition, higher selling prices in our Canadian operations in accordance with the increase in the cost of milk as raw material, and higher sales volumes in our Argentinean operations were the main factors. The increase was partially offset by lower export prices in our Argentinean operations. The USA Dairy Products Sector contributed approximately 35 million CAD to the revenue increase as compared to the corresponding quarter last fiscal year, resulting mainly from the inclusion of the Alto Acquisition. Less favourable dairy ingredients market conditions, lower sales volumes and a lower average block market per pound of cheese in the current quarter compared to the same quarter last fiscal year, partially offset this increase. Revenues from our Grocery Products Sector increased by approximately 1,0 million CAD in the fourth quarter of fiscal 2009 in comparison to the same quarter last fiscal year.

EBITDA for the fourth quarter totalled 141,9 million CAD, a 4,4 million CAD increase compared to the same quarter last fiscal year.

EBITDA from the CEA Dairy Products Sector increased by approximately 4,0 million CAD in comparison to the same quarter last fiscal year. The inclusion of the Neilson Dairy Acquisition, as well as operational efficiencies, and the weakening of the Canadian Dollar as compared to the Argentinean Peso were the main reasons for this EBITDA increase. This offset an unfavourable dairy ingredients market in the Canadian operations of 1,0 million CAD as well as an unfavourable export market and an inventory write-down of 1,0 million CAD in the Argentinean operations. The Dairy Products Division (Europe) had lower EBITDA in the fourth quarter.

The EBITDA of the USA Dairy Products Sector decreased by approximately 1,0 million CAD in the current quarter compared to the same quarter last fiscal year. A decrease in the average block market per pound of cheese in the current quarter compared to the same quarter last fiscal year had an effect on EBITDA, negatively impacting the basis of absorption of our fixed costs as well as having an unfavourable impact on the realization of our inventories. These decreases were offset by a more favourable relationship between the average block market per pound of cheese and the cost of milk as raw material compared to the same quarter last fiscal year. In addition, the Sector also experienced a less favourable dairy ingredients market. The market factor decreases were offset during the quarter by an increase due to the benefits derived from the initiatives undertaken in prior and current fiscal years with regards to improved operational efficiencies and increased selling prices. The weakening of the Canadian Dollar during the quarter added approximately 7,0 million CAD to this fiscal year´s EBITDA.

The EBITDA of the Grocery Products Sector increased by approximately 1,0 million CAD for the quarter ended March 31, 2009 in comparison to the same quarter last fiscal year. During the quarter, the Sector incurred lower costs towards brand support which offset additional operating costs related to higher ingredient, packaging, labour, and energy costs.

Info: «Financial Results for Fiscal 2009, Ended March 31, 2009 – Net earnings at 278,9 million CAD, down 3,2 percent – Revenues at 5,79 billion CAD, up 14,5 percent» (complete press release).