Saputo profit rises on “rationalization”

Canada’s biggest dairy processor has logged a substantial boost in its year-end bottom line, partly through “rationalization” in its Canadian business and increased Canadian fluid milk sales.

Montreal-based Saputo posted $288.2 million in net earnings on $5.06 billion in revenue in its fiscal 2008 ending March 31, the company reported Thursday. Earnings were up 20.9 per cent from $238.5 million on $4 billion in revenues in fiscal 2007.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from the company’s Canadian, European and Argentinean operations were up 14.6 per cent, credited to “benefits derived from rationalization activities undertaken in our Canadian operations during prior fiscal years,” along with improved efficiencies, increased sales volumes from Canadian fluid milk activities and benefits from capital investments in Argentina.

The larger jump in EBITDA, however, was in the company’s U.S. operations, which saw a 75.5 per cent increase mainly on the acquisition of the Land O’Lakes West Coast industrial cheese business, as well as on “revisions to reduce the manufacturing milk cost by the State of California and the United States Department of Agriculture.”

Those U.S. earnings, however, were offset by the rising Canadian dollar, which “eroded approximately $10 million” from U.S. EBITDA.

EBITDA in the company’s grocery products sector dropped to $17.2 million from $26.4 million in 2007, “mainly due to higher ingredients, packaging and labour costs and to lower sales volumes from our Canadian and American activities.”

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