Saputo Reports Q2 FY2025 Financials, Announces Normal Course Issuer Bid Amid 8.9% Revenue Growth
Financial Highlights for Q2 FY2025:
- Revenue: $4.708 billion, up $385 million from the same period in 2023.
- Net Earnings: $126 million (down from $156 million), with EPS of $0.30, a decrease from $0.37.
- Adjusted EBITDA: $389 million, a slight decline of 2.3%.
- Adjusted Net Earnings: $157 million, with Adjusted EPS at $0.37.
Carl Colizza, President and CEO, commented, “Our steady cash generation this quarter allowed us to advance in our capital allocation strategy. We are pleased to announce our intention to initiate a Normal Course Issuer Bid (NCIB), which supports our long-term commitment to value creation for shareholders.”
Key Factors Impacting Q2 Results:
- Higher revenues in all sectors, with notable operational efficiencies in the Canada and USA sectors.
- Challenges from U.S. market factors due to an unfavourable milk-cheese spread, though pricing protocols helped mitigate impact.
- Cost challenges in Argentina due to inflation outpacing currency devaluation, while Australia benefited from reduced milk costs.
- Europe continued growth with higher branded cheese sales for the third consecutive quarter.
Dividend and Capital Allocation Update
Saputo’s Board of Directors has approved a dividend of $0.19 per share, payable on December 20, 2024, to shareholders of record as of December 10, 2024.
Saputo also intends to file an NCIB with the Toronto Stock Exchange (TSX) to purchase up to 2% of its common shares, commencing upon TSX acceptance. This buyback reflects Saputo’s commitment to optimize its capital structure and support shareholder returns.
Fiscal 2025 Outlook
Saputo projects ongoing improvements driven by strategic initiatives:
- Expected progress in the USA sector with enhanced balance in milk supply and demand.
- Continued ramp-up in optimization and capacity expansion in key markets.
- The Europe sector will benefit from inventory cycle improvements and site consolidation.
- Expected reduction in leverage ratio below the target of 2.25x net debt to adjusted EBITDA, aligning with stronger cash flow and reduced capital expenditures following major strategic investments.
