Financial results for fiscal 2008, ended March 31, 2008
Financial results for fiscal 2008, ended March 31, 2008
06/05/2008 0:00 UTC
Net earnings at $288.2 million, up 20.9%
Revenues at $5.059 billion, up 26.4%
(Montréal, June 5, 2008) – Saputo Inc. released today its financial results for fiscal 2008, which ended March 31, 2008.
- Net earnings totalled $288.2 million or $1.40 (basic) per share1, up 20.9% compared to $238.5 million or $1.15 (basic) per share in fiscal 2007.
- Consolidated revenues totalled $5.059 billion, an increase of $1.058 billion or 26.4% compared to $4.001 billion posted in fiscal 2007.
- Consolidated earnings before interest, income taxes, depreciation and amortization (EBITDA)2amounted to $526.0 million, an increase of $99.7 million or 23.4% compared to $426.3 million in fiscal 2007.
- EBITDA in the Canada, Europe and Argentina Dairy Products Sector (CEA Dairy Products Sector) totalled $363.4 million, as compared to $317.1 million last fiscal year, an increase of $46.3 million or 14.6%. The increase is mainly attributed to the benefits derived from rationalization activities undertaken in our Canadian operations during prior fiscal years, better efficiencies, along with increased sales volumes from our Canadian fluid milk activities and benefits derived from capital investments made in current and prior fiscal years in our Argentinean operations. The sector also benefited from more favourable by-product market conditions.
- EBITDA in the USA Dairy Products Sector amounted to $145.5 million, a $62.6 million or 75.5% increase compared to $82.9 million in fiscal 2007. This increase is mainly due to initiatives undertaken by the Company in the prior and current fiscal years, as well as the inclusion of the acquisition of the activities of Land O’Lakes West Coast industrial cheese business (Land O’Lakes West Coast Acquisition). The sector also benefited from the revisions to reduce the manufacturing milk cost by the State of California and the United States Department of Agriculture. In addition, an average block 3market per pound of cheese significantly higher than in fiscal 2007 improved the basis of absorption of our fixed costs and realization of our inventories having a favourable impact on the EBITDA. The rise of the Canadian dollar eroded approximately $10 million from the sector’s EBITDA.
- EBITDA in the Grocery Products Sector amounted to $17.2 million, a decrease as compared to $26.4 million for the previous fiscal year. This decrease is mainly due to higher ingredients, packaging and labour costs and to lower sales volumes from our Canadian and American activities.
- Cash flows generated by operations amounted to $291.1 million for fiscal 2008, a decrease of $52.4 million compared to $343.5 million in fiscal 2007.
- The Company increased the use of its bank loans by $91.4 million. The Company also issued shares for a cash consideration of $28.4 million as part of the stock option plan, purchased share capital totalling $81.5 million in accordance with the normal course issuer bid, and paid $94.5 million in dividends.
Summary of Fourth Quarter Results
- Net earnings amounted to $75.2 million for the quarter ended March 31, 2008, an increase of $12.3 million compared to the same quarter last fiscal year.
- Revenues totalled $1.266 billion, an increase of $257.4 million or 25.5% compared to the $1.009 billion for the same quarter last fiscal year. The increase is attributed mostly to our USA Dairy Products Sector whose revenues increased by approximately $204 million compared to the corresponding quarter last fiscal year. The inclusion of the Land O’Lakes West Coast Acquisition along with higher sales volumes and selling prices are the main factors explaining this increase. The revenues from our CEA Dairy Products Sector also contributed to the overall increase in revenues in the fourth quarter as compared to last fiscal year. Higher selling prices in our Canadian and Argentinean operations in accordance with the increase in the cost of milk as raw material, increased sales volumes from our Canadian fluid milk activities, and the inclusion of our UK operations were the main factors responsible for this increase. It was partially offset by a lower by-product market, a decrease in volume mainly on exports in our Argentinean operations and the appreciation of the Canadian dollar versus the Argentinean peso. Revenues from our Grocery Products Sector decreased in the fourth quarter of fiscal 2008 in comparison to the same quarter last fiscal year. This decrease is due to lower Canadian sales volume as a result of price increases, in addition to the launch of private label products by retailers and highly competitive prices in the market place. Also, sales volumes from our American co-packing activities showed significant decreases compared to last fiscal year.
- EBITDA for the fourth quarter totalled $137.5 million, a $26.0 million increase compared to the same quarter last fiscal year.
- The EBITDA of the CEA Dairy Products Sector increased by approximately $10 million in the fourth quarter of fiscal 2008 compared to the corresponding quarter last fiscal year. Higher sales volumes from our Canadian fluid milk activities and improved Argentinean operations were the main factors behind this increase. This offset a less favourable by-product market, an adverse effect relating to new government regulations limiting selling prices in Argentina, and the appreciation of the Canadian dollar versus the Argentinean peso.
- EBITDA from the USA Dairy Products Sector increased by approximately $19 million compared to the corresponding quarter last fiscal year. The increase is due to the initiatives undertaken by the Company in the prior and current fiscal years as well as the inclusion of the Land O’Lakes West Coast Acquisition. An average block market per pound of cheese higher in the current quarter compared to the same quarter last fiscal year created a better absorption of our fixed costs.
- The Grocery Products Sector EBITDA decreased by approximately $3 million due to higher ingredients, packaging and labour costs and the decline in sales volume from our Canadian and American activities.
Outlook
Fiscal 2008 was an excellent year for the Company. Our divisions performed well and are ready to enter fiscal 2009 with confidence and enthusiasm.
Our Canadian dairy operations will continue to work towards the optimization of our production facilities in an effort to improve efficiencies. One of our challenges in fiscal 2009 will be the implementation of the new standards of composition for cheese manufactured in and imported to Canada. We intend to be in compliance with these new Canadian requirements notwithstanding that they are different from the international cheese standards. We intend to mitigate the impact that these new standards will have on our results, while trying our utmost to minimize the effect on our customers.
In fiscal 2009, we will continue to integrate our European operations. For our German operations, our focus will be to complete the integration and achieve better efficiencies with the help of our two Canadian employees transferred in fiscal 2008. The integration of the UK operations is further ahead in the process. We anticipate that this division will increase efficiencies and improve overall profitability.
Our Dairy Products Division (Argentina), in fiscal 2009, will continue to focus on efficiencies. With the expected return of milk production volumes after major floods in early fiscal 2008, this should increase our production volumes and allow us to further develop the domestic and international markets.
The acquisition of the activities of Alto Dairy Cooperative completed at the beginning of fiscal 2009 will further enhance our presence in the US and will also complement our previous Land O’Lakes West Coast Acquisition completed last fiscal year. Part of fiscal 2009’s objective is to fully integrate these new operations within the Saputo culture and values and improve their profitability.
Our Grocery Products Sector’s objective for fiscal 2009 will be to improve on operational efficiencies and optimize its manufacturing processes in order to mitigate increasing ingredients and packaging costs, in addition to completing the integration of Biscuits Rondeau Inc. and Boulangerie Rondeau Inc. business.
We are in an excellent financial position with a low level of debt and a sound structure. This will allow us to pursue our growth through acquisitions.
Financial Statements and Management’s Analysis
For more information on the results of fiscal 2008 as well as the fourth quarter of fiscal 2008, reference is made to the audited consolidated financial statements and the notes thereto and to our Management’s Analysis for the fiscal year ended March 31, 2008. These documents can be obtained on SEDAR at www.sedar.com.
Caution Regarding Forward-Looking Statements
This press release, including the “Outlook” section, contains forward-looking statements within the meaning of securities laws. These statements are based, among others, on our current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic and industry environments in which we operate or which could affect our activities, our ability to attract and retain clients and consumers as well as our operating costs, raw materials and energy supplies which are subject to a number of risks and uncertainties. Forward-looking statements can generally be identified by the use of the conditional tense, the words “may”, “should”, “would”, “believe”, “plan”, “expect”, “intend”, “anticipate”, “estimate”, “foresee”, “objective” or “continue” or the negative of these terms or variations of them or words and expressions of similar nature. Actual results could differ materially from the conclusion, forecast or projection stated in such forward-looking information. As a result, we 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 our actual results to differ materially from our current expectations are discussed throughout the MD&A and, in particular, in “Risks and Uncertainties”. Forward-looking information contained in this press release, including the “Outlook” section, is based on management’s current estimates, expectations and assumptions, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time.
Dividends
The Board of Directors of the Company declared a dividend of $0.12 per share, payable on
July 18, 2008 to shareholders of record as of July 7, 2008. This dividend is for the quarter ended March 31, 2008.
Conference Call
A conference call to discuss the fiscal 2008 results will be held on Thursday, June 5, 2008 at 3:00 PM, Eastern Time. To participate in the conference call, dial 1 888 241 0326. To ensure your participation, please dial in approximately five minutes before the call.
To listen to this call on the web, please enter http://events.onlinebroadcasting.com/saputo/060508/index.php in your web browser.
For those unable to participate, an instant replay will be available until midnight, Thursday, June 12, 2008. To access the replay dial 1 800 839 4180, ID number 47895449. A replay of the conference call will also be available on the Company’s web site at www.saputo.com.
(1) All references to number of Common Shares and prices of Common Shares made herein have been adjusted to reflect the 100% stock dividend declared on December 10, 2007, which had the same effect as a two-for-one stock split.
(2) 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 and amortization. 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. Reference is made to section entitled “Measurement of results not in accordance with Generally Accepted Accounting Principles” contained in the Management’s Analysis.
(3) “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 the cheese.
About Saputo
Together, over the years, we have aspired to grow, exploring new opportunities while staying true to our philosophy. Our progress is owed to the continued dedication of our 9,200 employees, who, across 5 countries, team up every day to go further. They craft, market and distribute a wide range of high-quality products, including cheese, fluid milk, yogurt, dairy ingredients and snack-cakes. Saputo is the 15th largest dairy processor in the world, the largest in Canada, the third largest in Argentina, among the top three cheese producers in the United States, and the largest snack-cake manufacturer in Canada. Consumers and customers in over 40 countries appreciate our products distributed under our well-known brands such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, Danscorella, De Lucia, Dragone, DuVillage 1860, Frigo, Kingsey, La Paulina, Nutrilait, Ricrem, Stella, Treasure Cave, HOP&GO!, Rondeau and Vachon. Saputo Inc. is a public company whose shares are traded on the Toronto Stock Exchange under the symbol SAP.
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Information
Karine Vachon
Advisor, Communications
514.328.3377
Data
Revenues at $5.059 billion, up 26.4%
(Montréal, June 5, 2008) – Saputo Inc. released today its financial results for fiscal 2008, which ended March 31, 2008.
- Net earnings totalled $288.2 million or $1.40 (basic) per share1, up 20.9% compared to $238.5 million or $1.15 (basic) per share in fiscal 2007.
- Consolidated revenues totalled $5.059 billion, an increase of $1.058 billion or 26.4% compared to $4.001 billion posted in fiscal 2007.
- Consolidated earnings before interest, income taxes, depreciation and amortization (EBITDA)2amounted to $526.0 million, an increase of $99.7 million or 23.4% compared to $426.3 million in fiscal 2007.
- EBITDA in the Canada, Europe and Argentina Dairy Products Sector (CEA Dairy Products Sector) totalled $363.4 million, as compared to $317.1 million last fiscal year, an increase of $46.3 million or 14.6%. The increase is mainly attributed to the benefits derived from rationalization activities undertaken in our Canadian operations during prior fiscal years, better efficiencies, along with increased sales volumes from our Canadian fluid milk activities and benefits derived from capital investments made in current and prior fiscal years in our Argentinean operations. The sector also benefited from more favourable by-product market conditions.
- EBITDA in the USA Dairy Products Sector amounted to $145.5 million, a $62.6 million or 75.5% increase compared to $82.9 million in fiscal 2007. This increase is mainly due to initiatives undertaken by the Company in the prior and current fiscal years, as well as the inclusion of the acquisition of the activities of Land O’Lakes West Coast industrial cheese business (Land O’Lakes West Coast Acquisition). The sector also benefited from the revisions to reduce the manufacturing milk cost by the State of California and the United States Department of Agriculture. In addition, an average block 3market per pound of cheese significantly higher than in fiscal 2007 improved the basis of absorption of our fixed costs and realization of our inventories having a favourable impact on the EBITDA. The rise of the Canadian dollar eroded approximately $10 million from the sector’s EBITDA.
- EBITDA in the Grocery Products Sector amounted to $17.2 million, a decrease as compared to $26.4 million for the previous fiscal year. This decrease is mainly due to higher ingredients, packaging and labour costs and to lower sales volumes from our Canadian and American activities.
- Cash flows generated by operations amounted to $291.1 million for fiscal 2008, a decrease of $52.4 million compared to $343.5 million in fiscal 2007.
- The Company increased the use of its bank loans by $91.4 million. The Company also issued shares for a cash consideration of $28.4 million as part of the stock option plan, purchased share capital totalling $81.5 million in accordance with the normal course issuer bid, and paid $94.5 million in dividends.
Summary of Fourth Quarter Results
- Net earnings amounted to $75.2 million for the quarter ended March 31, 2008, an increase of $12.3 million compared to the same quarter last fiscal year.
- Revenues totalled $1.266 billion, an increase of $257.4 million or 25.5% compared to the $1.009 billion for the same quarter last fiscal year. The increase is attributed mostly to our USA Dairy Products Sector whose revenues increased by approximately $204 million compared to the corresponding quarter last fiscal year. The inclusion of the Land O’Lakes West Coast Acquisition along with higher sales volumes and selling prices are the main factors explaining this increase. The revenues from our CEA Dairy Products Sector also contributed to the overall increase in revenues in the fourth quarter as compared to last fiscal year. Higher selling prices in our Canadian and Argentinean operations in accordance with the increase in the cost of milk as raw material, increased sales volumes from our Canadian fluid milk activities, and the inclusion of our UK operations were the main factors responsible for this increase. It was partially offset by a lower by-product market, a decrease in volume mainly on exports in our Argentinean operations and the appreciation of the Canadian dollar versus the Argentinean peso. Revenues from our Grocery Products Sector decreased in the fourth quarter of fiscal 2008 in comparison to the same quarter last fiscal year. This decrease is due to lower Canadian sales volume as a result of price increases, in addition to the launch of private label products by retailers and highly competitive prices in the market place. Also, sales volumes from our American co-packing activities showed significant decreases compared to last fiscal year.
- EBITDA for the fourth quarter totalled $137.5 million, a $26.0 million increase compared to the same quarter last fiscal year.
- The EBITDA of the CEA Dairy Products Sector increased by approximately $10 million in the fourth quarter of fiscal 2008 compared to the corresponding quarter last fiscal year. Higher sales volumes from our Canadian fluid milk activities and improved Argentinean operations were the main factors behind this increase. This offset a less favourable by-product market, an adverse effect relating to new government regulations limiting selling prices in Argentina, and the appreciation of the Canadian dollar versus the Argentinean peso.
- EBITDA from the USA Dairy Products Sector increased by approximately $19 million compared to the corresponding quarter last fiscal year. The increase is due to the initiatives undertaken by the Company in the prior and current fiscal years as well as the inclusion of the Land O’Lakes West Coast Acquisition. An average block market per pound of cheese higher in the current quarter compared to the same quarter last fiscal year created a better absorption of our fixed costs.
- The Grocery Products Sector EBITDA decreased by approximately $3 million due to higher ingredients, packaging and labour costs and the decline in sales volume from our Canadian and American activities.
Outlook
Fiscal 2008 was an excellent year for the Company. Our divisions performed well and are ready to enter fiscal 2009 with confidence and enthusiasm.
Our Canadian dairy operations will continue to work towards the optimization of our production facilities in an effort to improve efficiencies. One of our challenges in fiscal 2009 will be the implementation of the new standards of composition for cheese manufactured in and imported to Canada. We intend to be in compliance with these new Canadian requirements notwithstanding that they are different from the international cheese standards. We intend to mitigate the impact that these new standards will have on our results, while trying our utmost to minimize the effect on our customers.
In fiscal 2009, we will continue to integrate our European operations. For our German operations, our focus will be to complete the integration and achieve better efficiencies with the help of our two Canadian employees transferred in fiscal 2008. The integration of the UK operations is further ahead in the process. We anticipate that this division will increase efficiencies and improve overall profitability.
Our Dairy Products Division (Argentina), in fiscal 2009, will continue to focus on efficiencies. With the expected return of milk production volumes after major floods in early fiscal 2008, this should increase our production volumes and allow us to further develop the domestic and international markets.
The acquisition of the activities of Alto Dairy Cooperative completed at the beginning of fiscal 2009 will further enhance our presence in the US and will also complement our previous Land O’Lakes West Coast Acquisition completed last fiscal year. Part of fiscal 2009’s objective is to fully integrate these new operations within the Saputo culture and values and improve their profitability.
Our Grocery Products Sector’s objective for fiscal 2009 will be to improve on operational efficiencies and optimize its manufacturing processes in order to mitigate increasing ingredients and packaging costs, in addition to completing the integration of Biscuits Rondeau Inc. and Boulangerie Rondeau Inc. business.
We are in an excellent financial position with a low level of debt and a sound structure. This will allow us to pursue our growth through acquisitions.
Financial Statements and Management’s Analysis
For more information on the results of fiscal 2008 as well as the fourth quarter of fiscal 2008, reference is made to the audited consolidated financial statements and the notes thereto and to our Management’s Analysis for the fiscal year ended March 31, 2008. These documents can be obtained on SEDAR at www.sedar.com.
Caution Regarding Forward-Looking Statements
This press release, including the “Outlook” section, contains forward-looking statements within the meaning of securities laws. These statements are based, among others, on our current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic and industry environments in which we operate or which could affect our activities, our ability to attract and retain clients and consumers as well as our operating costs, raw materials and energy supplies which are subject to a number of risks and uncertainties. Forward-looking statements can generally be identified by the use of the conditional tense, the words “may”, “should”, “would”, “believe”, “plan”, “expect”, “intend”, “anticipate”, “estimate”, “foresee”, “objective” or “continue” or the negative of these terms or variations of them or words and expressions of similar nature. Actual results could differ materially from the conclusion, forecast or projection stated in such forward-looking information. As a result, we 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 our actual results to differ materially from our current expectations are discussed throughout the MD&A and, in particular, in “Risks and Uncertainties”. Forward-looking information contained in this press release, including the “Outlook” section, is based on management’s current estimates, expectations and assumptions, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time.
Dividends
The Board of Directors of the Company declared a dividend of $0.12 per share, payable on
July 18, 2008 to shareholders of record as of July 7, 2008. This dividend is for the quarter ended March 31, 2008.
Conference Call
A conference call to discuss the fiscal 2008 results will be held on Thursday, June 5, 2008 at 3:00 PM, Eastern Time. To participate in the conference call, dial 1 888 241 0326. To ensure your participation, please dial in approximately five minutes before the call.
To listen to this call on the web, please enter http://events.onlinebroadcasting.com/saputo/060508/index.php in your web browser.
For those unable to participate, an instant replay will be available until midnight, Thursday, June 12, 2008. To access the replay dial 1 800 839 4180, ID number 47895449. A replay of the conference call will also be available on the Company’s web site at www.saputo.com.
(1) All references to number of Common Shares and prices of Common Shares made herein have been adjusted to reflect the 100% stock dividend declared on December 10, 2007, which had the same effect as a two-for-one stock split.
(2) 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 and amortization. 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. Reference is made to section entitled “Measurement of results not in accordance with Generally Accepted Accounting Principles” contained in the Management’s Analysis.
(3) “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 the cheese.
About Saputo
Together, over the years, we have aspired to grow, exploring new opportunities while staying true to our philosophy. Our progress is owed to the continued dedication of our 9,200 employees, who, across 5 countries, team up every day to go further. They craft, market and distribute a wide range of high-quality products, including cheese, fluid milk, yogurt, dairy ingredients and snack-cakes. Saputo is the 15th largest dairy processor in the world, the largest in Canada, the third largest in Argentina, among the top three cheese producers in the United States, and the largest snack-cake manufacturer in Canada. Consumers and customers in over 40 countries appreciate our products distributed under our well-known brands such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, Danscorella, De Lucia, Dragone, DuVillage 1860, Frigo, Kingsey, La Paulina, Nutrilait, Ricrem, Stella, Treasure Cave, HOP&GO!, Rondeau and Vachon. Saputo Inc. is a public company whose shares are traded on the Toronto Stock Exchange under the symbol SAP.
- 30 -
Information
Karine Vachon
Advisor, Communications
514.328.3377
Data
Saputo Group Inc.
Camillo Lisio, Executive Vice-President
(514) 328-3314
