CANADA – Saputo, a leading Canadian dairy company, has announced that it is on a “clear path to recovery” in its new fiscal year, with a key profit target still in sight although inflation and supply-chain disruptions are likely to persist.
The company said it has taken significant pricing actions throughout 2022 to offset inflation and is also preparing itself and its customers to possibly go for further pricing rounds should need be, in order to achieve increased performance in this fiscal year.
The strategy is also anticipated to back the company’s strategic plan of achieving an adjusted EBITDA target of US$2.125 billionby the end of fiscal 2025.
Saputo has already implemented a new round of price increases in the US and plans to implement another new price action in the UK and in Australia. Saputo anticipates these actions to get it back to 2021 profitability levels.
President and CEO Lino Saputo, Jr. admitted the results for the 12 months to the end of March were “disappointing” as net income and EBITDA both dropped amid persistent challenges around labour, supply-chain disruptions, and inflationary input costs.
Saputo’s fiscal 2022 revenues rose 5.2% to CAD15billion (US$11.60billion) and the adjusted EBITDA fell 22% to CAD1.16billion (US$ 0.90billion), while net income slid 56% to CAD274million (US$211.81 million).
This bad performance was linked to the Australian market having a declining milk pool weighed on results, to the effect of supply “significantly impacting efficiency and costs”, making the market to be challenging.
Mr. Saputo hinted that the company is looking at its Australian platform in terms of value but not volume and believes there is a way with the amount of milk being processing, or expected to process, to still drive very healthy profitability.
Additionally, In the US market, Saputo as a company “faced the most adversity”, in terms of labour, inflation, and supply chain challenges.
The company said it has addressed these challenges by improved staffing levels in the US in fiscal 2023, following aggressive hiring and retention initiatives, and assuming lower Covid-19-related absenteeism.
This should translate into better output, improved productivity, and the beginning of a return to more normal sales volume levels, according to the CEO.
The CEO further acknowledged that this year, they are clear about realistic headwinds, but also very clear about mitigating factors and what needs to be done to make sure that they are successful, by continuously monitoring input costs.
Saputo, meanwhile, is also in discussions to review milk prices in Canada most likely in August, with a “high” likelihood assigned to that probability.
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