• Net profit up 12.2%
  • EBITDA grows 19.3%
  • Sales climb 28%
Saputo said the addition of Morningstar added to EBITDA

Saputo said the addition of Morningstar added to EBITDA

Canadian dairy giant Saputo saw earnings climb in its first quarter but warned of a "challenging" year ahead.

Net earnings in the three months to the end of June totalled C$136.7m (US$131.7m), an increase of 12.2% on the prior year. EBITDA was up 19.3% to C$242.1m.

Saputo said the addition of US dairy business Morningstar, which it acquired from Dean Foods in January, added to EBITDA in the period as well as boosting sales, which were up 28% to C$2.17bn.

A higher average block market per pound of cheese in the US and higher selling prices for milk in Canada also helped sales.

Saput said the remainder of the current financial year will be "challenging", particularly in its international business, which is expected to continue to face increasing milk costs. However, the company said its goal remains to "continue to improve overall efficiencies and pursue growth internally and through acquisitions".

Show the press release
Saputo Inc.: Financial Results for Fiscal 2014 First Quarter Ended June 30, 2013
Net earnings at $136.7 million, up 12.2%
MONTREAL, QUEBEC--(Marketwired - Aug. 6, 2013) - Saputo Inc. (TSX:SAP) (Saputo or the Company) reported today its financial results for the first quarter of fiscal 2014, which ended on June 30, 2013. All amounts in this news release are in Canadian dollars, unless otherwise indicated, and are presented according to International Financial Reporting Standards (IFRS).

--  Net earnings totalled $136.7 million, an increase of $14.9 million or
    12.2%. 
--  Earnings before interest, income taxes, depreciation and amortization
    (EBITDA) amounted to $242.1 million, an increase of $39.1 million or
    19.3%. 
--  Revenues for the quarter amounted to $2.174 billion, an increase of
    $475.2 million or 28.0%. 
--  Basic earnings per share (EPS) was $0.70 and diluted EPS was $0.69 for
    the quarter, an increase of 14.8%, as compared to basic EPS of $0.61 and
    diluted EPS of $0.60 for the corresponding quarter last fiscal year. 

                                                                            
                                                                            
(in millions of Canadian (CDN) dollars, except per share amounts)           
(unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
                                           For the three-month periods ended
                                            June 30,    June 30,   March 31,
                                                2013        2012        2013
----------------------------------------------------------------------------
Revenues                                     2,173.5     1,698.3     2,053.3
EBITDA                                         242.1       203.0       229.7
Net earnings                                   136.7       121.8       100.5
Adjusted net earnings(1)                       136.7       121.8       129.2
                                                                            
EPS                                                                         
  Basic                                         0.70        0.61        0.51
  Diluted                                       0.69        0.60        0.51
                                                                            
Adjusted EPS(1)                                                             
  Basic                                         0.70        0.61        0.65
  Diluted                                       0.69        0.60        0.65
----------------------------------------------------------------------------

--  As of April 1, 2013, the Company realigned its reporting structure
    consistent with its operating structure and now reports under three
    geographic sectors: the Canada Sector, the USA Sector and the
    International Sector. The comparative figures have been reclassified to
    reflect this new reporting structure. 
--  The acquisition of Morningstar Foods, LLC (Morningstar Acquisition) on
    January 3, 2013, renamed Saputo Dairy Foods USA, LLC, contributed to
    revenues and EBITDA in the USA Sector for the quarter. 
--  In the USA Sector, the average block market(2) per pound of cheese
    increased by US$0.24 compared to the same period last fiscal year,
    increasing revenues. Also in the USA Sector, market factors positively
    impacted EBITDA. 
--  The Canada Sector EBITDA decreased slightly mainly due to a lower
    contribution from the change in the product mix and higher costs. 
--  The International Sector EBITDA remained relatively stable as compared
    to the same quarter last fiscal year. 
--  The fluctuation of the Canadian dollar versus the US dollar and the
    Argentinean peso during the quarter had a negative impact on revenues as
    compared to the same quarter last fiscal year. 
--  The Board of Directors reviewed the dividend policy and increased the
    quarterly dividend from $0.21 to $0.23 per share, representing a 9.5%
    increase. The quarterly dividend will be payable on September 16, 2013
    to common shareholders of record on September 5, 2013. 
--  A portion of the dividend payable on September 16, 2013, estimated to be
    $0.0086 per common share, will not qualify for the enhanced dividend tax
    credit in Canada and accordingly, will not be designated as an eligible
    dividend. The remaining portion of the dividend, currently estimated to
    be $0.2214 per common share, will be designated as an eligible dividend
    for Canadian federal and provincial income tax purposes. The whole
    dividend of $0.23 per common share will remain a "qualified dividend"
    for United States tax purposes. 

(1)  Adjusted net earnings and adjusted earnings per share (basic and       
     diluted) are non-IFRS measures. Refer to the section "Measurement of   
     Results not in Accordance with International Financial Reporting       
     Standards" included on page 7 of the Management's Discussion and       
     Analysis included in the Company's 2013 Annual Report for the          
     definition of these terms.                                             
(2)  "Average block market" is the average daily price of a 40 pound block  
     of cheddar traded on the Chicago Mercantile Exchange (CME), used as the
     base price for cheese.
 
Additional Information

For more information on the first quarter results of fiscal 2014, reference is made to the condensed interim consolidated financial statements, the notes thereto and to the Management's Discussion and Analysis for the first quarter of fiscal 2014. These documents can be obtained on SEDAR at www.sedar.com and in the "Investors and Media" section of the Company's website, at www.saputo.com.

Conference Call

A conference call to discuss the fiscal 2014 first quarter results will be held on Tuesday, August 6, 2013 at 1:00 p.m. Eastern Time. To participate in the conference call, dial 1-800-406-9725. To ensure your participation, please dial in approximately five minutes before the call.

To listen to this call on the Web, please enter www.gowebcasting.com/4476 in your Web browser.

For those unable to participate, a replay of the conference will be available until 11:59 p.m., Tuesday, August 13, 2013. To access the replay, dial 1-800-558-5253, ID number 21668057. A webcast will also be archived on www.saputo.com, in the "Investors and Media" section, under Press Releases. 

About Saputo

Saputo produces, markets, and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients.Saputo is one of the top ten dairy processors in the world, the largest in Canada, the third largest in Argentina and among the top three cheese producers in the United States. Our products are sold in more than 40 countries under well-known brand names such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, Dragone, DuVillage 1860, Friendship, Frigo Cheese Heads, Great Midwest, King's Choice, Kingsey, La Paulina, Milk2Go, Neilson, Nutrilait, Ricrem, Salemville, Stella and Treasure Cave. Saputo Inc. is a publicly traded company whose shares are listed on the Toronto Stock Exchange under the symbol "SAP".

CAUTION REGARDING FORWARD-LOOKING STATEMENTS 

This news release contains forward-looking statements within the meaning of securities laws. These statements are based, among other things, on Saputo's assumptions, expectations, estimates, objectives, plans and intentions as of the date hereof regarding projected revenues and expenses, the economic, industry, competitive and regulatory environments in which the Company operates or which could affect its activities, its ability to attract and retain customers and consumers, as well as the availability and cost of milk and other raw materials and energy supplies, its operating costs and the pricing of its finished products on the various markets in which it carries on business.

These forward-looking statements include, among others, statements with respect to the Company's short and medium term objectives, outlook, business projects and strategies to achieve those objectives, as well as statements with respect to the Company's beliefs, plans, objectives and expectations. The words "may", "should", "will", "would", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective", "continue", "propose" or "target", or the negative of these terms or variations of them, the use of conditional tense or words and expressions of similar nature, are intended to identify forward-looking statements. 

By their nature, forward-looking statements are subject to a number of inherent risks and uncertainties. Actual results could differ materially from the conclusion, forecast or projection stated in such forward-looking statements. As a result, the Company cannot guarantee that any forward-looking statements will materialize. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause actual results to differ materially from current expectations are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including the "Risks and Uncertainties" section of the Management's Discussion and Analysis included in the Company's 2013 Annual Report.

Forward-looking statements are based on Management's current estimates, expectations and assumptions, which Management believes are reasonable as of the date hereof, and, accordingly, are subject to changes after such date. You should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. 

Except as required under applicable securities legislation, Saputo does not undertake to update or revise these forward-looking statements, whether written or verbal, that may be made from time to time by itself or on its behalf, whether as a result of new information, future events or otherwise.

OPERATING RESULTS 

Consolidated revenues for the quarter ended June 30, 2013 amounted to $2.174 billion, an increase of $475.2 million or 28.0% in comparison to $1.698 billion for the corresponding quarter last fiscal year. This increase was mainly due to the inclusion of the revenues derived from the Morningstar Acquisition. Also, a higher average block market per pound of cheese in the USA Sector, as well as higher selling prices in relation to the higher cost of milk in the Canada and International Sectors contributed to this increase. Lower cheese sales volumes in the USA Sector, as compared to the corresponding quarter last fiscal year, partially offset this increase. The fluctuation of the Canadian dollar versus the US dollar and Argentinean peso decreased revenues by approximately $6 million.

Consolidated earnings before interest, income taxes, depreciation and amortization (EBITDA) for the first quarter of fiscal 2014 amounted to $242.1 million, an increase of $39.1 million or 19.3% in comparison to $203.0 million for the same quarter last fiscal year. This increase is mainly explained by EBITDA derived from the Morningstar Acquisition. Also, favourable market factors, which were partially offset by lower cheese sales volumes, in the USA Sector contributed to the EBITDA increase. The fluctuation of the Canadian dollar had an insignificant impact on EBITDA, as compared to the same period last fiscal year.

OTHER CONSOLIDATED RESULTS ITEMS

Depreciation and amortization for the first quarter of fiscal 2014 totalled $34.3 million compared to $27.2 million for the comparative quarter of fiscal 2013, an increase of $7.1 million, essentially related to the Morningstar Acquisition.

Net interest expense for the three-month period ended June 30, 2013 increased by $8.9 million in comparison to the same period last fiscal year. This increase is mainly attributed to a higher level of debt resulting from the Morningstar Acquisition.

Income taxes for the first quarter of fiscal 2014 totalled $55.8 million, reflecting an effective tax rate of 29.0% compared to 28.1% for the same quarter last fiscal year. 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 totalled $136.7 million for the quarter ended June 30, 2013, compared to $121.8 million for the same quarter last fiscal year. These reflect the various factors analyzed in this news release. 

Original source: Saputo Inc