Financial results for fiscal 2003
Financial results for fiscal 2003
06/10/2003 0:00 UTC
Net earnings up 8.4%
(Montréal, June 10, 2003) – Saputo Inc. revealed today its financial results for fiscal 2003, which ended March 31, 2003.
- Net earnings of $173.7 million or $1.68 (basic) per share, up 8.4% as compared to fiscal 2002. This amount takes into account the recording of an expense relative to stock based compensation in the amount of $1.3 million. If it were not for that element, net earnings would have risen by 9.2% over fiscal 2002.
- Revenues totalled $3.398 billion compared to $3.457 billion of fiscal 2002. The average selling price per pound of cheese on the US market was 21% lower for fiscal 2003 as compared to last year creating a shortfall in revenues of approximately $158 million. Also, our Bakery Division operated exclusively in a snack cake environment in fiscal 2003, unlike last year, when there were 15 weeks of operations in the cookie, fine bread and soup categories. These operations were transferred to Dare Foods in July 2001.
- EBITDA amounted to $354.3 million in fiscal 2003, up 0.5% over last year.
- EBITDA in the Canadian Dairy Products Sector of $200.6 million, up 9.6% compared to the same period last year. EBITDA margin for this sector climbed from 9.2% last year to 9.9% during fiscal 2003. These amounts take into account approximately $1.1 million of rationalization cost incurred during the year.
- EBITDA in the US Dairy Products Sector of $120.5 million, a decrease of $13.5 million from last year. Market price conditions in fiscal 2003 created a shortfall of approximately $19 million in EBITDA compared to fiscal 2002.
- Sales volume in the US Dairy Products Sector up nearly 9.5% as compared to last year.
- EBITDA in the Grocery Products Sector of $33.2 million for an EBITDA margin of 19.8% as compared to $35.4 million and a margin of 18.9% for fiscal 2002.
- Cash generated before changes in non-cash operating working capital items of $250.1 million, slightly over last year.
- Repayment of $133.9 million in long-term debt and bank loans.
Summary of fourth quarter results
- Net earnings stand at $47.8 million.
- Net earnings take into account a positive after-tax adjustment of $0.9 million to the cumulative stock based compensation cost.
- The effective tax rate was 21.1%, lower than the last fiscal year and reflecting the different jurisdictions in which taxable profits originated, as well as a $4.1 million tax benefit in connection with a transfer pricing agreement reached in the fourth quarter, which takes into account the difference in income tax rates applicable to Canadian-US inter-company transactions.
- EBITDA for the fourth quarter amounted to $87.5 million, compared to $92.5 million for the same period of fiscal 2002. The decrease stems essentially from the US Dairy Products Sector, where the average selling price per pound of cheese was lower than in fiscal 2002 and combined with the appreciation of the Canadian dollar to account for a reduction in EBITDA. The Canadian Dairy Products Sector and Grocery Products Sector were relatively stable compared to fiscal 2002.
- Revenues totalled $807.1 million, compared to $833.6 million for the same period of fiscal 2002, representing a decrease of $26.5 million.
- In the US Dairy Products Sector, appreciation of the Canadian dollar in relation to US currency this last quarter compared to the corresponding period in fiscal 2002 represents roughly $15 million less in revenues. The average selling price per pound of cheese on the US market was down by about 11% during the quarter compared to fiscal 2002, representing about $17 million less in revenues. At December 31, 2002, our US sales volumes were up 11.1% for the nine-month period compared to the fiscal year before. For the final quarter, growth was 4.8%, bringing the increase in volume for fiscal 2003 to 9.5%.
- The Canadian Dairy Products Sector and Grocery Products Sector enjoyed slight increases in revenues amounting to $4.1 million, or 0.8%.
Sensibility analysis
Canadian-US currency variations may affect results. Based on 2003 US dollar conversion and on our 2003 financial results, a change of CND$0.01 would have resulted in a variation of approximately $0.4 million in net earnings, $1.7 million in EBITDA and $17.0 million in revenues.
Outlook
Over the coming years, the dairy industry will need to focus on creating innovative dairy products that match the changing nutritional needs of consumers. While milk and cheese have been, and will continue to be, mainstays of Canadian consumers’ diets, advances in technology will increasingly allow us to utilize wholesome milk products as a means to deliver a broad range of nutritional, lifestyle and health needs. A critical component to the industry achieving innovation and consumer satisfaction
lies in cooperation between and objectives shared by all levels of the industry.
We have mentioned frequently that the Canadian dairy market does not present many possibilities for organic growth. Cheese consumption is static, notwithstanding cheese sales growth in the retail segment. We believe that the development of new value-added products may sustain the growth and development of new or existing categories of milk products or dairy beverages. We are already present in that segment with some of our products in the Milk Division, but much remains to be done through innovation.
In our Canadian Dairy Products Sector, beyond the development of new products or new niches, our guarantee of success continues to lie in ensuring our efficiency. We are going to complete the rationalization project initiated in 2003 and we intend to spend approximately $2 million over the course of fiscal 2004, which should translate into savings of approximately $7 million for that period and of approximately $8 million per year thereafter. Possibilities for organic growth being quite limited, we must be highly active in the daily management of our activities that encompass all levels of the organization. During the 2004 fiscal year, our evaluation will focus, among other things, on the efficiency of our operational structure and on maximizing the use of our production capacities. The Company’s origins are in the manufacture of cheese, and for this reason our attention has always primarily been focused, as is the case today, on seeking out acquisitions in the cheese industry. However, with a market share of approximately 20% in fluid milk, we are open to considering eventual acquisitions in Canada, in milk and in dairy beverages.
The United States remains the place where the potential for acquisitions is greatest. The US industry is coming off a rather difficult year and remains relatively fragmented. There is room for consolidation, and we will be watchful. We are going to continue our strategic organic growth, where we could easily increase capacity with a minor investment, if necessary. Beginning April 1, 2003, we also introduced a minimum pricing formula on all of our cheese sales in the United States, closely linked to the Government support price per pound of cheese on the US market.
Our Bakery Division will continue to work on improving efficiency while further developing our business in all regions of Canada. It is important to remain efficient in an environment where competition is increasing and where we are exposed to price fluctuations in raw materials. We will continue in our efforts to gradually penetrate the US market.
Our goal of becoming a world-class cheese company remains unchanged, but to achieve it we must be in a market where the raw material is accessible at competitive international prices. Therefore, we have initiated a search for acquisitions and partnerships that would take us beyond North America. Our intention here remains the same: to broaden our horizons in order to better serve our customer base, and in such a way as to be competitive on a worldwide basis.
Board of Directors
Over the last few months, two directors joined the Board of the Company. They are Mr. Jean Gaulin and Mr. Frank A. Dottori. Mr. Gaulin is currently a corporate director. During his career, he has held different executive positions at Ultramar Diamond Shamrock. Mr. Dottori is currently President and Chief Executive Officer of Tembec, a Canadian forest products company.
Forward-looking statements
This press release document contains management’s analysis on forward-looking statements. Caution should be used in the interpretation of management’s analysis and statements, since management often makes reference to objectives and strategies, which contain a certain element of risk and uncertainty. Due to the nature of our business, the risks and uncertainties associated with it could cause the results to differ materially from those stated in such forward-looking statements. We disclaim any intention or obligation to update or revise forward-looking statements based on any new information or event that may occur.
Dividends
The Board of Directors of the Company declared a dividend of $0.10 per share, payable on July 11, 2003, to shareholders of record as of June 25, 2003. This dividend is for the quarter ended March 31, 2003.
Conference call
A conference call to discuss the fiscal 2003 results will be held on Tuesday, June 10, 2003 at 4:15 PM, Eastern time. To participate in the conference dial (416) 695-5806 or 1-800-273-9672. To ensure your participation, please dial in approximately five minutes before the call.
To listen to this call on the web, please enter http://web1.to.fastvibe.com/CWS/sap/030610sap/staging.htm in your web browser.
For those unable to participate, an instant replay will be available until midnight, Tuesday, June 17, 2003. To access the replay dial (416) 695-5800 or 1-800-408-3053, passcode 1433192. The conference call will also be archived on the Saputo web site at www.saputo.com .
About Saputo
Every day, in 47 plants and in our distribution centres, Saputo’s 7,000 employees proudly manufacture, market and distribute a wide range of products that find their way daily on store shelves, in restaurants and in prepared meals. Active in the dairy and grocery product sectors, the Company markets its products under such brand names as Saputo, Stella, Frigo, Dragone, Armstrong, Caron, Cayer, Treasure Cave, Dairyland, Baxter, Nutrilait and Vachon. A dynamic world-class company, Saputo Inc. is the largest dairy processor in Canada and one of the leading cheese manufacturers in North America. Saputo Inc. is a public company and its shares are listed on the Toronto Stock Exchange under the symbol SAP. Visit www.saputo.com for further information.
1 Measurement of results not in accordance with generally accepted accounting principles
The Company assesses its financial performance based on its EBITDA, this being earnings before interest, income taxes, depreciation, amortization and stock based compensation. EBITDA is not a measurement of performance as defined by generally accepted accounting principles in Canada, and consequently may not be comparable to similar measurements presented by other companies.
Information
Claude Pinard
Vice President
(514) 328-3381
Financial Statements
(Montréal, June 10, 2003) – Saputo Inc. revealed today its financial results for fiscal 2003, which ended March 31, 2003.
- Net earnings of $173.7 million or $1.68 (basic) per share, up 8.4% as compared to fiscal 2002. This amount takes into account the recording of an expense relative to stock based compensation in the amount of $1.3 million. If it were not for that element, net earnings would have risen by 9.2% over fiscal 2002.
- Revenues totalled $3.398 billion compared to $3.457 billion of fiscal 2002. The average selling price per pound of cheese on the US market was 21% lower for fiscal 2003 as compared to last year creating a shortfall in revenues of approximately $158 million. Also, our Bakery Division operated exclusively in a snack cake environment in fiscal 2003, unlike last year, when there were 15 weeks of operations in the cookie, fine bread and soup categories. These operations were transferred to Dare Foods in July 2001.
- EBITDA amounted to $354.3 million in fiscal 2003, up 0.5% over last year.
- EBITDA in the Canadian Dairy Products Sector of $200.6 million, up 9.6% compared to the same period last year. EBITDA margin for this sector climbed from 9.2% last year to 9.9% during fiscal 2003. These amounts take into account approximately $1.1 million of rationalization cost incurred during the year.
- EBITDA in the US Dairy Products Sector of $120.5 million, a decrease of $13.5 million from last year. Market price conditions in fiscal 2003 created a shortfall of approximately $19 million in EBITDA compared to fiscal 2002.
- Sales volume in the US Dairy Products Sector up nearly 9.5% as compared to last year.
- EBITDA in the Grocery Products Sector of $33.2 million for an EBITDA margin of 19.8% as compared to $35.4 million and a margin of 18.9% for fiscal 2002.
- Cash generated before changes in non-cash operating working capital items of $250.1 million, slightly over last year.
- Repayment of $133.9 million in long-term debt and bank loans.
Summary of fourth quarter results
- Net earnings stand at $47.8 million.
- Net earnings take into account a positive after-tax adjustment of $0.9 million to the cumulative stock based compensation cost.
- The effective tax rate was 21.1%, lower than the last fiscal year and reflecting the different jurisdictions in which taxable profits originated, as well as a $4.1 million tax benefit in connection with a transfer pricing agreement reached in the fourth quarter, which takes into account the difference in income tax rates applicable to Canadian-US inter-company transactions.
- EBITDA for the fourth quarter amounted to $87.5 million, compared to $92.5 million for the same period of fiscal 2002. The decrease stems essentially from the US Dairy Products Sector, where the average selling price per pound of cheese was lower than in fiscal 2002 and combined with the appreciation of the Canadian dollar to account for a reduction in EBITDA. The Canadian Dairy Products Sector and Grocery Products Sector were relatively stable compared to fiscal 2002.
- Revenues totalled $807.1 million, compared to $833.6 million for the same period of fiscal 2002, representing a decrease of $26.5 million.
- In the US Dairy Products Sector, appreciation of the Canadian dollar in relation to US currency this last quarter compared to the corresponding period in fiscal 2002 represents roughly $15 million less in revenues. The average selling price per pound of cheese on the US market was down by about 11% during the quarter compared to fiscal 2002, representing about $17 million less in revenues. At December 31, 2002, our US sales volumes were up 11.1% for the nine-month period compared to the fiscal year before. For the final quarter, growth was 4.8%, bringing the increase in volume for fiscal 2003 to 9.5%.
- The Canadian Dairy Products Sector and Grocery Products Sector enjoyed slight increases in revenues amounting to $4.1 million, or 0.8%.
Sensibility analysis
Canadian-US currency variations may affect results. Based on 2003 US dollar conversion and on our 2003 financial results, a change of CND$0.01 would have resulted in a variation of approximately $0.4 million in net earnings, $1.7 million in EBITDA and $17.0 million in revenues.
Outlook
Over the coming years, the dairy industry will need to focus on creating innovative dairy products that match the changing nutritional needs of consumers. While milk and cheese have been, and will continue to be, mainstays of Canadian consumers’ diets, advances in technology will increasingly allow us to utilize wholesome milk products as a means to deliver a broad range of nutritional, lifestyle and health needs. A critical component to the industry achieving innovation and consumer satisfaction
lies in cooperation between and objectives shared by all levels of the industry.
We have mentioned frequently that the Canadian dairy market does not present many possibilities for organic growth. Cheese consumption is static, notwithstanding cheese sales growth in the retail segment. We believe that the development of new value-added products may sustain the growth and development of new or existing categories of milk products or dairy beverages. We are already present in that segment with some of our products in the Milk Division, but much remains to be done through innovation.
In our Canadian Dairy Products Sector, beyond the development of new products or new niches, our guarantee of success continues to lie in ensuring our efficiency. We are going to complete the rationalization project initiated in 2003 and we intend to spend approximately $2 million over the course of fiscal 2004, which should translate into savings of approximately $7 million for that period and of approximately $8 million per year thereafter. Possibilities for organic growth being quite limited, we must be highly active in the daily management of our activities that encompass all levels of the organization. During the 2004 fiscal year, our evaluation will focus, among other things, on the efficiency of our operational structure and on maximizing the use of our production capacities. The Company’s origins are in the manufacture of cheese, and for this reason our attention has always primarily been focused, as is the case today, on seeking out acquisitions in the cheese industry. However, with a market share of approximately 20% in fluid milk, we are open to considering eventual acquisitions in Canada, in milk and in dairy beverages.
The United States remains the place where the potential for acquisitions is greatest. The US industry is coming off a rather difficult year and remains relatively fragmented. There is room for consolidation, and we will be watchful. We are going to continue our strategic organic growth, where we could easily increase capacity with a minor investment, if necessary. Beginning April 1, 2003, we also introduced a minimum pricing formula on all of our cheese sales in the United States, closely linked to the Government support price per pound of cheese on the US market.
Our Bakery Division will continue to work on improving efficiency while further developing our business in all regions of Canada. It is important to remain efficient in an environment where competition is increasing and where we are exposed to price fluctuations in raw materials. We will continue in our efforts to gradually penetrate the US market.
Our goal of becoming a world-class cheese company remains unchanged, but to achieve it we must be in a market where the raw material is accessible at competitive international prices. Therefore, we have initiated a search for acquisitions and partnerships that would take us beyond North America. Our intention here remains the same: to broaden our horizons in order to better serve our customer base, and in such a way as to be competitive on a worldwide basis.
Board of Directors
Over the last few months, two directors joined the Board of the Company. They are Mr. Jean Gaulin and Mr. Frank A. Dottori. Mr. Gaulin is currently a corporate director. During his career, he has held different executive positions at Ultramar Diamond Shamrock. Mr. Dottori is currently President and Chief Executive Officer of Tembec, a Canadian forest products company.
Forward-looking statements
This press release document contains management’s analysis on forward-looking statements. Caution should be used in the interpretation of management’s analysis and statements, since management often makes reference to objectives and strategies, which contain a certain element of risk and uncertainty. Due to the nature of our business, the risks and uncertainties associated with it could cause the results to differ materially from those stated in such forward-looking statements. We disclaim any intention or obligation to update or revise forward-looking statements based on any new information or event that may occur.
Dividends
The Board of Directors of the Company declared a dividend of $0.10 per share, payable on July 11, 2003, to shareholders of record as of June 25, 2003. This dividend is for the quarter ended March 31, 2003.
Conference call
A conference call to discuss the fiscal 2003 results will be held on Tuesday, June 10, 2003 at 4:15 PM, Eastern time. To participate in the conference dial (416) 695-5806 or 1-800-273-9672. To ensure your participation, please dial in approximately five minutes before the call.
To listen to this call on the web, please enter http://web1.to.fastvibe.com/CWS/sap/030610sap/staging.htm in your web browser.
For those unable to participate, an instant replay will be available until midnight, Tuesday, June 17, 2003. To access the replay dial (416) 695-5800 or 1-800-408-3053, passcode 1433192. The conference call will also be archived on the Saputo web site at www.saputo.com .
About Saputo
Every day, in 47 plants and in our distribution centres, Saputo’s 7,000 employees proudly manufacture, market and distribute a wide range of products that find their way daily on store shelves, in restaurants and in prepared meals. Active in the dairy and grocery product sectors, the Company markets its products under such brand names as Saputo, Stella, Frigo, Dragone, Armstrong, Caron, Cayer, Treasure Cave, Dairyland, Baxter, Nutrilait and Vachon. A dynamic world-class company, Saputo Inc. is the largest dairy processor in Canada and one of the leading cheese manufacturers in North America. Saputo Inc. is a public company and its shares are listed on the Toronto Stock Exchange under the symbol SAP. Visit www.saputo.com for further information.
1 Measurement of results not in accordance with generally accepted accounting principles
The Company assesses its financial performance based on its EBITDA, this being earnings before interest, income taxes, depreciation, amortization and stock based compensation. EBITDA is not a measurement of performance as defined by generally accepted accounting principles in Canada, and consequently may not be comparable to similar measurements presented by other companies.
Information
Claude Pinard
Vice President
(514) 328-3381
Financial Statements
Lynda Leith
Investor Relations
(514) 328-3381
