Saputo eyes mergers, acquisitions in U.S., Canada, Australia

(NeilsonDairy.com)

Reuters — Canada’s largest dairy producer, Saputo, still digesting a major purchase in Australia, is examining other possible acquisitions there and in the U.S., Canada and Latin America, CEO Lino Saputo Jr. said Thursday.

In the U.S., potential acquisitions could cost less than $100 million to as much as $4 billion, Saputo said in a conference call to discuss quarterly results.

“The (U.S.) industry still is very fragmented,” he said. “So I think there are some great opportunities for us that could be small, medium or large.”

Saputo may also look for acquisitions in Canada worth around $100 million and is eager to add to its new foothold in Australia, where seven or eight players control up to 95 per cent of the dairy industry, he said.

Latin American countries like Brazil are attractive as well due to their growing middle class, Saputo said.

In February, Saputo bought 88 per cent of Australia’s Warrnambool Cheese and Butter Factory Co. for $449.6 million. [Related story]

Just over a year earlier, it purchased U.S.-based Morningstar Foods for $1.4 billion. [Related]

Saputo reported higher adjusted earnings for its fiscal fourth quarter as cheese and whey prices rose.

For the fourth quarter of 2014, adjusted net earnings rose 18 percent to $152.8 million in the quarter ended March 31, from $129.2 million a year earlier.

Revenue surged 21 per cent during the quarter, when Saputo won a bidding war for majority control of Warrnambool, to nearly $2.5 billion.

On an adjusted basis, analysts were expecting Saputo to earn 75 cents per share on revenue of $2.44 billion, according to Thomson Reuters I/B/E/S.

The Montreal-based company, whose dairy brands include Dairyland, Armstrong, Baxter and Neilson, is also among the top three cheese producers in the U.S.

Not including adjustments such as plant closure and acquisition costs, net income climbed 19 per cent to $119.8 million or 61 cents per share.

— Rod Nickel is a Reuters correspondent based in Winnipeg.

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