AUSTRALIA – Canadian dairy major Saputo plans to permanently close its Maffra, Victoria, facility and “streamline” activities at other two Australian sites, putting 75 jobs on the line.
While two other factories: one in Leongatha, also in Victoria, and another in Mil-Lel, in South Australia, will remain open, the company is set to downsize the activities at both facilities.
The company said in a statement: “Many of the impacted production and packaging functions at these three facilities will be absorbed or integrated into the company’s other Australian facilities, increasing capacity utilization and reducing costs.”
“Approximately 75 employees will be affected, and where alternative roles are not available, these employees will be provided with severance and outplacement support.”
The company said the changes have a minimal impact on consumers, and it expects no changes to its farmer relationships, with suppliers’ milk continuing to be collected and processed across Saputo Dairy Australia’s network. The changes will take effect in the first three months of 2023.
The announcement came almost two months after the dairy flagged more closures of facilities as part of one of its five pillar EBITDA-boosting initiatives over a four-year cycle.
Under its “optimization” strategy, Saputo made some pre-announced plans to shutter a site in Belmont, Wisconsin, and switch the Reedsburg facility in the same state from mozzarella to goat’s cheese production.
Another plant in Tulare, California, has been earmarked for closure, along with the Australian factory in Cobram, also in Victoria.
President and CEO Lino Saputo, Jr., pointed to the US and Australia, and a lesser degree Canada and the UK, as the likely targets for plant closures, but replete with CAPEX to improve efficiencies at other facilities.
Speaking to analysts after the release of the company’s second-quarter financial results, Mr. Saputo said the company will continue to re-evaluate its Australia network and all the global platforms to make sure that it has the right infrastructure in place for the total milk that it has and that anticipate over the next few years.
In the three months to 30 September, the company saw its overall revenues increase by 20.9%, year-on-year, to CAD4.46bn (US$3.35bn). Adjusted EBITDA was up by 30.4% to CAD369m.
Mr. Saputo said the results were “driven by the company’s successful efforts to mitigate inflation, its efficiency and productivity initiatives, and sustained consumer demand.
He added: “Consumer demand for dairy has remained relatively steady and price elasticity has held up better than expected in most of our markets, but we are monitoring closely for signs of changing consumer behaviors, with the average cost of the consumer basket continuing to increase.”
“Saputo is not overly concerned about price elasticity moving forward, as in challenging economic environments, dairy products have fared extremely well.”
Concerning the looming closures, Mr. Saputo said they are intended to enhance operational efficiency and strengthen Saputo’s competitive position in Australia.
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