Saputo Earnings Top Forecasts on High-Protein Dairy Demand

Revenue rose 3.6% to C$4.26 billion, slightly exceeding forecasts. Adjusted earnings were C$0.55 a share, 6 cents above consensus. Net income from continuing operations increased to C$213 million, or C$0.53 a share, from C$171 million, or C$0.42, a year earlier. Those results exclude Saputo’s U.K. business, which is being sold to Lactalis for about C$1.66 billion.

Saputo’s investments in added capacity and automated processing have helped it meet commercial demand for protein-dense products while absorbing lower commodity cheese prices. Chief Executive Carl Colizza said on Friday’s earnings call that markets were supportive, but growth increasingly came from higher sales volumes and demand for high-protein ingredients. Customers are taking up the company’s new capacity, he said, adding that demand is “structural” and continues to outpace supply growth.

The strongest gains came in the U.S. Adjusted earnings before interest, taxes, depreciation and amortization rose 23% to C$205 million, while the division’s margin widened to 9.6% from 7.8% a year earlier. Higher ingredient pricing and warehouse consolidation helped counter weaker cheddar block and butter prices. Chief Financial Officer Maxime Therrien said high-protein ingredient pricing, added capacity, higher volume and U.S. productivity more than offset softer cheese markets, inflation and higher selling, general and administrative costs.

Saputo shares rose 5.2% Friday to C$43.83 ($31.26).