• Net earnings up 26.5%
  • EBITDA climbs 3.6%
  • Sales grow 5.3%
The Morningstar offset a less favourable dairy ingredients product mix

The Morningstar offset a less favourable dairy ingredients product mix

Canadian dairy giant Saputo has recorded an increase in full-year profits, on the back of revenue boosted by its acquisition of Morningstar Foods.

Earnings in the 12 months to the end of March amounted to C$481.9m (US$466.8m), up 26.5% on last year. EBITDA reached C$860.8m, a 3.6% improvement on the prior year period.

Sales in the fiscal year grew 5.3% to reach C$7.30bn, boosted by the Morningstar acquisition in January. This offset a less favourable dairy ingredients product mix and lower sales volumes, increasing sales by around C$338m.

The fluctuation of the Canadian dollar also added around $4m in revenues.

Looking to the new fiscal year, Saputo said: "The company anticipates that the dairy market in fiscal 2014 will continue to be challenging. The Dairy Products Division (Canada) will target volume growth in the cheese and dairy ingredients categories, as well as seek volume increases despite declining market trends in the fluid milk category."

Show the press release

Saputo Inc.: Financial Results for the Fiscal Year Ended March 31, 2013
- Adjusted net earnings at $510.6 million, up 0.9%

- Net earnings at $481.9 million, up 26.5%

- Revenues at $7.298 billion, up 5.3%
MONTREAL, QUEBEC--(Marketwired - June 5, 2013) - Saputo Inc. (TSX:SAP) (Saputo or the Company) reported today its financial results for fiscal 2013, which ended on March 31, 2013. All amounts in this news release are in Canadian dollars, unless otherwise indicated, and are presented according to International Financial Reporting Standards (IFRS).

SELECTED ANNUAL FINANCIAL INFORMATION                                       
(in millions of CDN dollars, except per share amounts)                      
                                                                            
----------------------------------------------------------------------------
Fiscal years                                       2013      2012  Variance 
----------------------------------------------------------------------------
Revenues                                        7,297.7   6,930.4       5.3%
EBITDA (1)( )                                     860.8     830.9       3.6%
Net Earnings                                      481.9     380.8      26.5%
Acquisition costs                                   6.1         -           
Restructuring costs                                22.6         -           
Impairment of goodwill                                -     125.0           
Adjusted net earnings(2)                          510.6     505.8       0.9%
                                                                            
Per Share:                                                                  
Adjusted net earnings(2)                                                    
  Basic                                            2.58      2.51       2.8%
  Diluted                                          2.55      2.47           
Net earnings                                                                
  Basic                                            2.44      1.89      29.1%
  Diluted                                          2.41      1.86           
----------------------------------------------------------------------------
                                                                            
(1)  EBITDA is defined as earnings before interest, income taxes,           
     depreciation, amortization, acquisition, restructuring and impairment  
     costs.                                                                 
                                                                            
(2)  Adjusted net earnings and adjusted earnings per share (basic and       
     diluted) are non-IFRS measures and represent net earnings and earnings 
     per share without considering acquisition, restructuring and impairment
     costs. Refer to "Measurements not in accordance with International     
     Financial Reporting Standards" on page 7 of the Management's Discussion
     and Analysis, included in the Company's 2013 Annual Report, for the    
     definition of these terms.                                             

--  On January 3, 2013, the Company completed the acquisition of Morningstar
    Foods, LLC (Morningstar Acquisition) for a total cash consideration of
    $1.434 billion, financed through a combination of available cash and a
    new four- year term bank loan facility of $1.2 billion. 
--  The Morningstar Acquisition contributed to both revenues and EBITDA in
    the fourth quarter. 
--  The Company incurred acquisition costs relating to the Morningstar
    Acquisition, totalling $9.6 million ($6.1 million after tax), as well as
    restructuring costs in relation to plant closures in Europe and Canada
    totalling $32.6 million ($22.6 million after tax). 

 SELECTED SEGMENTED ANNUAL FINANCIAL INFORMATION                            
 (in millions of CDN dollars, except per share amounts)                     
                                                                            
----------------------------------------------------------------------------
Fiscal years                                       2013      2012  Variance 
----------------------------------------------------------------------------
Revenues                                                                    
Dairy Products                                                              
  CEA(1)                                        4,091.4   4,054.6       0.9%
  USA                                           3,069.2   2,741.8      11.9%
Grocery Products                                  137.1     134.0       2.3%
                                             -------------------------------
                                                7,297.7   6,930.4       5.3%
                                             -------------------------------
EBITDA                                                                      
Dairy Products                                                              
  CEA                                             499.0     514.8      -3.1%
  USA                                             347.9     303.4      14.7%
Grocery Products                                   13.9      12.7       9.4%
                                             -------------------------------
                                                  860.8     830.9       3.6%
----------------------------------------------------------------------------
 
                                                                            
(1)  Canada, Europe and Argentina.                                          
                                                                            
                                                                            
                                                                            
        FINANCIAL RESULTS FOR THE FOURTH QUARTER OF THE FISCAL YEAR       
                           ENDED MARCH 31, 2013                           
             Adjusted net earnings at $129.2 million, up 5.6%             
                      Net earnings at $100.5 million                      
                       Revenues at $2053.3, up 20.5%                      
                                                                          
                                                                          
SELECTED QUARTERLY FINANCIAL INFORMATION                                  
(in millions of CDN dollars, except per share amounts)                    
                                                                          
--------------------------------------------------------------------------
                                                                          
Fiscal years                                                          2013
                                                Q4      Q3      Q2      Q1
--------------------------------------------------------------------------
Revenues                                   2,053.3 1,800.6 1,745.4 1,698.3
EBITDA1                                      229.7   212.5   215.6   203.0
Net earnings (loss)                          100.5   130.0   129.6   121.8
Acquisition costs (2)                          6.1       -       -       -
Restructuring costs (2)                       22.6       -       -       -
Impairment of goodwill                           -       -       -       -
Adjusted net earnings (3)                    129.2   130.0   129.6   121.8
Per share:                                                                
Adjusted net earnings (3)                                                 
  Basic                                       0.65    0.66    0.66    0.61
  Diluted                                     0.65    0.65    0.65    0.60
Net earnings                                                              
  Basic                                       0.51    0.66    0.66    0.61
  Diluted                                     0.51    0.65    0.65    0.60
--------------------------------------------------------------------------

        FINANCIAL RESULTS FOR THE FOURTH QUARTER OF THE FISCAL YEAR        
                            ENDED MARCH 31, 2013                           
              Adjusted net earnings at $129.2 million, up 5.6%             
                       Net earnings at $100.5 million                      
                       Revenues at $2053.3, up 20.5%                       
                                                                           
                                                                           
SELECTED QUARTERLY FINANCIAL INFORMATION                                   
(in millions of CDN dollars, except per share amounts)                     
                                                                           
---------------------------------------------------------------------------
                                                                           
Fiscal years                                                           2012
                                                Q4       Q3      Q2      Q1
---------------------------------------------------------------------------
Revenues                                   1,703.5  1,796.5 1,791.4 1,639.0
EBITDA1                                      200.9    207.3   213.1   209.6
Net earnings (loss)                           (2.6)   129.8   127.1   126.6
Acquisition costs (2)                            -        -       -       -
Restructuring costs (2)                          -        -       -       -
Impairment of goodwill                       125.0        -       -       -
Adjusted net earnings (3)                    122.4    129.8   127.1   126.6
Per share:                                                                 
Adjusted net earnings (3)                                                  
  Basic                                       0.62     0.64    0.63    0.62
  Diluted                                     0.61     0.64    0.61    0.61
Net earnings                                                               
  Basic                                       0.00     0.64    0.63    0.62
  Diluted                                     0.00     0.64    0.61    0.61
---------------------------------------------------------------------------
                                                                            
(1)  EBITDA is defined as earnings before interest, income taxes,           
     depreciation, amortization, acquisition, restructuring and impairment  
     costs.                                                                 
                                                                            
(2)  Net of income taxes.                                                   
                                                                            
(3)  Adjusted net earnings and adjusted earnings per share (basic and       
     diluted) are non-IFRS measures and represent net earnings and earnings 
     per share without considering acquisition, restructuring and impairment
     costs. Refer to "Measurements not in accordance with International     
     Financial Reporting Standards" on page 7 of the Management's Discussion
     and Analysis, included in the Company's 2013 Annual Report, for the    
     definition of these terms.                                             
                                                                            
                                                                            
                                                                            
SELECTED FACTORS POSITIVELY (NEGATIVELY) AFFECTING EBITDA                   
(in millions of CDN dollars)                                                
                                                                            
----------------------------------------------------------------------------
Fiscal year                                                            2013 
                                                Q4      Q3       Q2      Q1 
----------------------------------------------------------------------------
Market factors(1)(2)                             5       8       10     (14)
Inventory write-down                             -       -        -      (3)
US currency exchange(1)                          -      (3)       2       3 
----------------------------------------------------------------------------
                                                                            
(1)  As compared to the same quarter of the last fiscal year.               
                                                                            
(2)  Market factors include the average block market per pound of cheese and
     its effect on the absorption of fixed costs and on the realization of  
     inventories, the effect of the relationship between the average block  
     market per pound of cheese and the cost of milk as raw material as well
     as market pricing impact related to sales of dairy ingredients.
 
INFORMATION BY SECTOR

CEA DAIRY PRODUCTS SECTOR                                                   
(in millions of CDN dollars)                                                
                                                                            
----------------------------------------------------------------------------
Fiscal                                                                      
 years                                 2013                             2012
----------------------------------------------------------------------------
                Q4      Q3      Q2       Q1       Q4      Q3      Q2      Q1
----------------------------------------------------------------------------
Revenues     988.0 1,057.6 1,020.7  1,025.0  1,009.6 1,042.2 1,032.5   970.2
EBITDA       121.1   128.1   122.0    127.8    121.9   131.9   135.7   125.3
----------------------------------------------------------------------------
                                                                            
Selected factors positively (negatively) affecting EBITDA                   
(in millions of CDN dollars)                                                
                                                                            
----------------------------------------------------------------------------
Fiscal years                                                           2013 
----------------------------------------------------------------------------
                                                  Q4      Q3      Q2     Q1 
----------------------------------------------------------------------------
Inventory write-down                               -       -       -     (3)
----------------------------------------------------------------------------
                                                                            
                                                                            
USA DAIRY PRODUCTS SECTOR                                                   
(in millions of CDN dollars)                                                
                                                                            
----------------------------------------------------------------------------
Fiscal years                            2013                            2012
----------------------------------------------------------------------------
                  Q4      Q3      Q2      Q1      Q4      Q3      Q2      Q1
----------------------------------------------------------------------------
Revenues     1,031.3   708.9   688.6   640.4   658.9   722.7   723.7   636.5
EBITDA         104.1    81.4    90.2    72.2    75.5    72.7    74.4    80.8
----------------------------------------------------------------------------
                                                                            
Selected factors positively (negatively) affecting EBITDA                   
(in millions of CDN dollars)                                                
                                                                            
----------------------------------------------------------------------------
Fiscal years                                                           2013 
----------------------------------------------------------------------------
                                            Q4       Q3         Q2       Q1 
----------------------------------------------------------------------------
Market factors(1 2)                          5        8         10      (14)
US currency exchange(1)                      -       (3)         2        3 
----------------------------------------------------------------------------
                                                                            
(1)  As compared to the previous fiscal year.                               
                                                                            
(2)  Market factors include the average block market per pound of cheese and
     its effect on the absorption of fixed costs and on the realization of  
     inventories, the effect of the relationship between the average block  
     market per pound of cheese and the cost of milk as raw material as well
     as market pricing impact related to sales of dairy ingredients.        
                                                                            
                                                                            
Other pertinent information                                                 
(in US dollars, except for average exchange rate)                           
----------------------------------------------------------------------------
Fiscal years                                            2013            2012
                                          Q4      Q3      Q2      Q1      Q4
----------------------------------------------------------------------------
Average block market per pound of                                           
 cheese                                1.668   1.955   1.750   1.539   1.522
Closing block price(1) per pound of                                         
 cheese                                1.693   1.760   2.075   1.650   1.490
Average whey market price(2) per                                            
 pound                                 0.580   0.620   0.550   0.500   0.630
Spread(3)                              0.017   0.028   0.060   0.072   0.017
US average exchange rate to Canadian                                        
 dollar(4)                             1.009   0.991   0.995   1.010   1.002
----------------------------------------------------------------------------
                                                                            
(1)  Closing block price is the price of a 40 pound block of cheddar traded 
     on the Chicago Mercantile Exchange (CME) on the last business day of   
     the fiscal year.                                                       
                                                                            
(2)  Average whey powder market price is based on Dairy Market News         
     published information.                                                 
                                                                            
(3)  Spread is the average block market per pound of cheese less the result 
     of the average cost per hundredweight of Class III and/or Class 4b milk
     price divided by 10.                                                   
                                                                            
(4)  Based on Bank of Canada published information.                         
                                                                            
                                                                            
GROCERY PRODUCTS SECTOR                                                     
(in millions of CDN dollars)                                                
----------------------------------------------------------------------------
Fiscal years                            2013                            2012
                  Q4      Q3      Q2      Q1      Q4      Q3      Q2      Q1
----------------------------------------------------------------------------
Revenues        34.0    34.1    36.1    32.9    35.0    31.6    35.2    32.3
EBITDA           4.5     3.0     3.4     3.1     3.7     2.7     2.9     3.4
----------------------------------------------------------------------------
 
Consolidated revenues for the quarter ended March 31, 2013 amounted to $2.053 billion, an increase of $349.8 million or 20.5% compared to $1.704 billion for the same quarter last fiscal year.

The USA Dairy Products Sector revenues increased by approximately $372 million as compared to the corresponding quarter last fiscal year. The inclusion of the Morningstar Acquisition offset a less favourable dairy ingredients product mix and lower sales volumes, increasing revenues by approximately $338 million. A more favourable average block market per pound of cheese in the fourth quarter of US$1.67 compared to US$1.52 during the same quarter of fiscal 2012 increased revenues by approximately $30 million. The fluctuation of the Canadian dollar added approximately $4 million in revenues as compared to the same quarter last fiscal year.

In the CEA Dairy Products Sector, revenues decreased by approximately $22 million in the fourth quarter as compared to last fiscal year. Lower sales volumes in the Canadian Division in addition to a less favourable dairy ingredients product mix contributed to this decrease. Price increases in relation to the price of raw milk in the Argentinian Division partially offset this decrease. The European Division revenues also decreased slightly. Finally, the strengthening of the Canadian dollar against the Argentinian peso eroded revenues by approximately $7 million as compared to the same quarter last fiscal year.

Revenues from the Grocery Products Sector decreased by approximately $1 million in the fourth quarter of fiscal 2013 in comparison to the same quarter last fiscal year. This decrease is mainly related to slightly lower sales volumes as compared to the same quarter last fiscal year.

Consolidated earnings before interest, income taxes, depreciation, amortization, acquisition, restructuring, and impairment costs (EBITDA) totalled $229.7 million for the quarter ended March 31, 2013, an increase of $28.7 million or 14.3% compared to the $201.0 million for the same quarter last fiscal year.

The EBITDA of the USA Dairy Products Sector increased by approximately $29 million in the fourth quarter compared to the same quarter last fiscal year. The additional EBITDA derived from the Morningstar Acquisition, offset lower sales volumes, higher operational and promotional costs and the impact of higher milk costs resulting from the revised milk pricing formula in California. These factors combined positively affected EBITDA by approximately $23 million as compared to the same quarter last fiscal year. An increase in the average block market per pound of cheese to US$1.67 in the fourth quarter, as compared to US$1.52 in the same quarter last fiscal year, positively affected the absorption of fixed costs, and had a favourable impact on the realization of inventories. The relationship between the average block market per pound of cheese and the cost of milk as raw material was comparable to the same quarter last fiscal year and did not affect EBITDA. Conversely, a less favourable dairy ingredients market negatively affected EBITDA as compared to the same period last fiscal year. These combined market factors increased EBITDA by approximately $5 million as compared to the same period last fiscal year.

EBITDA for the CEA Dairy Products Sector decreased by approximately $1 million in comparison to the same quarter last fiscal year. Benefits derived from lower ingredients and other operational costs were partially offset by a less favourable dairy ingredients product mix in Canada. In Argentina, lower sales volumes and selling prices, mainly in the export market, negatively affected EBITDA. The Dairy Products Division (Europe) recorded a $1.1 million loss in EBITDA in the fourth quarter.

The EBITDA of the Grocery Products Sector increased by approximately $1 million for the quarter ended March 31, 2013 in comparison to the same quarter last fiscal year. This increase is mainly attributable to lower operating costs more than offsetting the effect of lower sales volumes as compared to the corresponding quarter last fiscal year.

Depreciation and amortization for the quarter ended March 31, 2013 totalled $35.6 million, an increase of $8.9 million compared to $26.7 million for the same quarter last fiscal year. The increase is mainly due to the inclusion of Morningstar's results for the fourth quarter of fiscal 2013.

In the fourth quarter of fiscal 2013, the Company incurred acquisition costs for the Morningstar Acquisition, totalling $9.6 million ($6.1 million after tax), as well as restructuring costs in relation to plant closures in Europe and Canada totalling $32.6 million ($22.6 million after tax). In connection with this restructuring, the Company has incurred $7.8 million in severance costs, $2.8 million in other closure costs, $21.7 million in impairment charges to property, plant and equipment, and $0.3 million in impairment charges to goodwill. In the fourth quarter of fiscal 2012, the Company recorded an impairment of goodwill in the amount of $125.0 million ($125.0 million after tax) for the Grocery Products Sector.

Net interest expense increased to $14.9 million compared to $5.2 million for the corresponding period last fiscal year. The increase is mainly attributed to a higher level of debt resulting from the Morningstar Acquisition, as compared to the same quarter last fiscal year.

With respect to income taxes, the effective tax rate for the current quarter was 27.9% compared to 27.6% for the same quarter last fiscal year, excluding acquisition and restructuring costs in fiscal 2013 and impairment of goodwill in fiscal 2012. The income tax rate varies and could increase or decrease based on the amount of taxable income derived and from which source, any amendments to tax laws and income tax rates and changes in assumptions and estimates used for tax assets and liabilities by the Company and its affiliates.

Net earnings amounted to $100.5 million for the quarter ended March 31, 2013, an increase of $103.1 million compared to the net loss of $2.6 million for the same quarter last fiscal year. This is due to the factors mentioned above.

Adjusted net earnings(1) amounted to $129.2 million for the quarter ended March 31, 2013, an increase of $6.8 million compared to the same quarter last fiscal year. This increase is due to the factors mentioned above, without considering acquisition, restructuring and impairment costs.

During the quarter, the Company added approximately $82 million in property, plant and equipment, issued shares for a cash consideration of $12.5 million as part of the stock option plan, purchased share capital for $58.2 million in accordance with the Company's normal course issuer bid and paid out $41.3 million in dividends to its shareholders. For the same quarter, the Company generated net cash from operating activities of $160.1 million, a slight decrease from the $162.4 million generated for the corresponding period last fiscal year.

Original source: Saputo Inc