CANADA – In a strategic move to enhance efficiency and cut costs, Saputo, a prominent Canada-based dairy group, is evaluating the future of its King Island Dairy cheese factory in Tasmania, Australia.
The company, ranked among the world’s top ten dairy companies by Rabobank, has engaged advisers to explore various options for the facility.
Saputo acquired King Island Dairy in 2019 as part of its broader acquisition of cheese assets from Australia-based food and beverage group Lion.
The cheese factory, currently employing 63 staff, has historical significance in the region, and Saputo expresses a desire to find a buyer to ensure the continued success of its renowned speciality cheese products.
Leanne Cutts, the president and COO of Saputo’s international and Europe division, emphasized the company’s commitment to maximizing returns and maintaining a high-quality, low-cost processing position in Australia.
“While considering options for the King Island Dairy, Saputo plans to increase investments in other sites across Australia, including in Tasmania,” he said.
This decision comes as Saputo undertakes a comprehensive review of its manufacturing network, involving closures in both Australia and North America.
The company has also initiated the sale of certain Australian sites, pending approval from local competition officials. Earlier this year, Saputo earmarked funds for its facility in Smithton, Australia, following the closure of a site in Victoria.
Saputo’s recent moves include the announcement of the closure of a manufacturing facility in the United States. The Lancaster site in Wisconsin is set to cease operations in the fourth quarter of the 2024 financial year, with Saputo citing market headwinds and waning consumer demand as contributing factors.
Despite challenges, Saputo remains committed to strategic investments and decision-making, with a focus on maximizing returns for every litre of milk processed.
The company is set to publish its second-quarter financial results this week, following a 2.8% decline in revenue to C$4.2 billion (US$3.04 billion) in the first quarter of the current financial year.
Adjusted EBITDA increased by 4.3% to C$362 million, but Saputo acknowledges it may not meet a target set for that metric by its fiscal 2025 year.
In April, Saputo announced plans to sell two factories in Australia to Coles, the country’s second-largest grocer. However, the Australian Competition and Consumer Commission (ACCC) recently delayed its decision on the deal, seeking additional feedback from concerned parties.
The ACCC was initially scheduled to present its conclusions on September 14.