Saputo Forecasts Steady Growth Amid Global Challenges, Fueled by Strategic Investments and Market Adjustments
Source: The DairyNews
Saputo Inc. (TSX: SAP) announced its financial results for the fourth quarter and fiscal year ended March 31, 2024, while projecting a complex but optimistic outlook for the upcoming fiscal years. While inflationary pressures are expected to ease compared to the previous year, elevated labor costs and increased marketing expenditures to support new product launches and brand promotions are anticipated to persist.
The company forecasts gradual improvements in the U.S. dairy markets, supported by a better alignment between milk supply and demand, although volatility is expected to continue in the short to medium term. Globally, demand for dairy products is projected to remain moderate, influenced by subdued international market prices and overarching macroeconomic conditions.
Key strategic initiatives under the company’s Global Strategic Plan are set to drive forward momentum. Saputo expects a reduction in duplicate operating costs and a phased increase in contributions from optimization and capacity expansion efforts, particularly in its U.S. operations, through FY25 and into FY26. The European sector is likely to benefit from an improved product mix and lower cost base due to cost-out initiatives and site consolidations. Additionally, cash flow is expected to strengthen, supported by higher adjusted EBITDA and a reduction in capital expenditures following the substantial completion of strategic investments.
The company’s leverage ratio is projected to improve, expected to fall below the target of 2.25 times net debt to adjusted EBITDA, as operational efficiencies and cash flow enhancements take effect.
For FY25, priorities include scaling operations in the U.S. through the completion of several capital projects aimed at transforming the cheese network and operationalizing new facilities. The Canadian and European sectors will focus on automation, supply chain optimization, and expanding product portfolios to drive growth. In Australia, strategic reviews and asset sales, such as the divestment of two milk processing facilities to Coles Group Limited, are on the agenda as part of the company’s broader effort to rebalance its business between domestic and export activities, Saputo reported.
Key strategic initiatives under the company’s Global Strategic Plan are set to drive forward momentum. Saputo expects a reduction in duplicate operating costs and a phased increase in contributions from optimization and capacity expansion efforts, particularly in its U.S. operations, through FY25 and into FY26. The European sector is likely to benefit from an improved product mix and lower cost base due to cost-out initiatives and site consolidations. Additionally, cash flow is expected to strengthen, supported by higher adjusted EBITDA and a reduction in capital expenditures following the substantial completion of strategic investments.
The company’s leverage ratio is projected to improve, expected to fall below the target of 2.25 times net debt to adjusted EBITDA, as operational efficiencies and cash flow enhancements take effect.
For FY25, priorities include scaling operations in the U.S. through the completion of several capital projects aimed at transforming the cheese network and operationalizing new facilities. The Canadian and European sectors will focus on automation, supply chain optimization, and expanding product portfolios to drive growth. In Australia, strategic reviews and asset sales, such as the divestment of two milk processing facilities to Coles Group Limited, are on the agenda as part of the company’s broader effort to rebalance its business between domestic and export activities, Saputo reported.
20.09.2024
The Global Agricultural Commodity Market is expected to grow at a CAGR of 4.2% during 2025-2030
18.09.2024
GDT Price Index Up 0.8%
