Canadian dairy group Saputo booked higher full-year sales and earnings thanks to the contribution from recently-acquired Australian dairy firm Warrnambool Cheese and Butter Factory.
Net earnings increased 14.8% to C$612.9m (US$492.4m) in the 12 months to the end of March. Excluding M&A, adjusted net earnings were up 2.1%. Adjusted EBITDA increased 4.1% to C$612.9m. Sales in the 12 months grew 15.1% to C$10.66bn.
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Looking to 2016, the company said it would continue to expand its presence and "build" on its Warrnambool acquisition in Australia, which the company hopes to use as a springboard in Asia. Saputo added it would continue to drive efficiencies to improve its margins.
However, TD Securities analyst Michael Van Aelst sounded a note of caution for the group's outlook. "We have lowered our forecasts to reflect further margin pressures, mostly outside the US, leaving us forecasting negative earnings trends in F2016 and only a modest recovery in F2017," he wrote in an investor note. "Although we see room for the shares to fall a little further near term (to fully reflect the weaker fundamental outlook), the always-present potential for an acquisition should prevent the shares from getting oversold. That said, barring a larger, synergistic acquisition, we also do not see a catalyst to push the shares higher over the next year, particularly given the uncertainty related to a potential outcome from the Trans-Pacific Partnership (TPP) talks."
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