Revised Feb. 3, 2010 — Canada’s largest dairy processing firm has raised its net earnings by over a third in its second fiscal quarter, thanks in part to revenue from one of its newer subsidiaries.
Montreal-based Saputo on Tuesday posted $94.45 million in profit on $1.48 billion in revenues for the quarter ending Sept. 30, up from a net of $69.03 million on $1.45 billion in revenues in the year-earlier period.
The “acquired activities” of Neilson Dairy, which Saputo bought from Weston Foods for $465 million late last year, contributed to the quarter’s revenues, the company said.
Pressuring revenues, the average block market per pound of cheese in the U.S. fell by US63 cents compared to the same period in the previous fiscal year, Saputo said.
(The “average block market,” a figure used as the base price for cheese, is the average daily price per pound of a 40-pound block of cheddar traded on the Chicago Mercantile Exchange.)
However, the relationship between the average block market per pound of cheese in the U.S. and the cost of milk as raw material “benefitted the company,” Saputo said Tuesday.
“In addition, the realization of inventories was favourable as compared to the same quarter last fiscal year.”
Saputo also said Tuesday it plans to buy, either on the TSX or by other means, some of its own common shares for cancellation. Over 12 months starting Nov. 13, the company said it plans to buy up to 10.3 million shares, or about five per cent of its issued and outstanding stock.
“The company believes that the purchase by Saputo of its own shares may, in appropriate circumstances, be a responsible investment of funds on hand,” Saputo said in its Q2 release.
Saputo also noted the Federal Court of Canada’s dismissal last month of the legal challenge it filed alongside Kraft and Parmalat last year over amended regulations that set new standards for cheese made in and imported to Canada.
“We are currently reviewing the possibility to appeal the judgment,” Saputo said.
CORRECTION, Feb. 3, 2010 — The original version of this article stated in error that Saputo’s fiscal quarter ending Sept. 30, 2009 was its third quarter. The article has been revised throughout.