Global dairy giant Saputo Inc. is confident that demand for products in Canada remains strong, despite efforts to raise farmgate milk prices for the second time this year.
“Dairy products are still valuable to consumers in pounds of protein,” said Karl Coritza, president and chief operating officer of North America, in a conference call to discuss the company’s latest results. Said.
“Despite price pressures and the general economy, we strongly feel that dairy products continue to perform well.”
The Canadian Dairy Commission said last week that it received a request from a Canadian dairy farmer to raise milk prices in the middle of the year. The federal agency, which oversees Canada’s dairy and supply control systems, said it would meet on request next week.
If the price increase is approved, it will take effect on September 1, and Colizza said Saputo “absolutely recovers costs” by passing on these high prices to its customers.
Still, demand for dairy products is expected to remain strong, but higher prices can create “trade-offs,” he said.
“Recipes are subject to change, and customers are likely to move from higher costs to higher value cheeses,” says Colizza. “We see such changes on a regular basis.”
Saputo’s net income plummeted 64% in the fourth quarter, primarily due to the tough market conditions affecting US operations.
Montreal-based dairy companies have pointed to major headwinds as labor shortages, supply chain disruptions and inflationary pressures.
Lino Saputo Jr., Chairman and CEO of Saputo’s Board of Directors, said the company faces fluctuations in commodity prices, rising input and logistics costs, especially labor and supply constraints in the United States.
“We faced the most adversity in the United States, where labor, inflation and supply chain challenges are becoming more serious,” he said on the phone.
According to Sapt, the company is suffering from high absenteeism in the United States, and the surge in Omicron has exacerbated the problem, disrupted production schedules and impacted service levels.
“The accelerated inflation that followed the intensification of conflicts in Ukraine put further downward pressure on margins,” he said. “We expect this new pricing measure to mitigate the effects of short-term inflation.”
Despite the challenges in the United States, the company’s operations in Canada, Argentina and the United Kingdom were strong and in line with expectations, Sapt said.
Saputo had a fourth-quarter profit of $ 37 million (9 cents per diluted share), which ended March 31, compared to $ 103 million (1 diluted share) in the year-ago quarter. It was 25 cents per.
Adjusted earnings decreased from $ 124 million (30 cents per share) in the fourth quarter of 2021 to $ 108 million (26 cents per share).
Revenues totaled $ 3.96 billion for the quarter, up 15% from $ 3.44 billion in the year-ago quarter.
According to financial data firm Refinitiv, Saputo was expected to report adjusted earnings of 25 cents per share for $ 3.69 billion in revenue.
For the full year, Saputo earned $ 274 million with $ 15 billion in revenue, while it earned $ 626 million with $ 14.3 billion in 2021 revenue.