Saputo Plans $181 Million Dairy Processing Plant in Western Canada

Canadian dairy processor Saputo continues to expand operations globally with a new US$181.4 million facility (CAN$240 million) being planned in Western Canada.

Saputo announced the finalized plans during the company’s second quarter earnings call where it was reported that the new facility in Port-Coquitlam, British Columbia will help continue to serve the region.

In order to finance the plant construction, Saputo sold an existing plant in Burnaby, British Columbia during October 2018 for US$158 million (CAN$209 million). The sale will result in an after tax gain of US$126.3 million (CAD$167 million) in the third quarter of fiscal 2019. Saputo will lease the facility in Burnaby until 2021 when the Port-Coquitlam plant is expected to be operational.

Saputo is continuing to expand Canadian operations with the pending acquisition of Shepherd Gourmet, a specialty cheese and yogurt company.

Last month Saputo added onto its U.S.-based business by purchasing two cheese processing plants in New Mexico and Wisconsin for US$85 million (CAN$111 million).

The purchase of F&A Dairy Products is the latest by Saputo in a number of moves made to expand in the U.S. Last year, Saputo bought an extended shelf-life dairy plant from Southeast Milk in Florida. In 2013, Morningstar Foods formerly owned by Dean Foods Company was purchased, giving Saputo an offering dairy and non-dairy extended shelf-life in the U.S. Other U.S. processing plants have been purchased in the past decade such as two California cheese plants and a Wisconsin cheese plant.

Saputo operates a U.S. division that includes the Dairystar and Friendship Dairies brands and markets a number of products under the label, including: milk, cottage cheese, ice cream, creamers and whipped cream.

Earnings for Saputo during the second financial quarter were reported US$2.49 (CAD$3.420 billion), an increase of US$405 million (CAD$536 million) or 18.6%. Despite the great revenue performance Saputo’s net earnings were just $122 million (CAD$163.1 million), a decrease of $16.7 million (CAD$22.1 million) or 11.9%.

According to RaboBank, Saputo is the 8th largest dairy processor in the world after switching spots with China’s Yilli Group. Prior to buying Australia’s Murray Goulburn Co-Operative Co. this year, Saputo had 50 manufacturing facilities in Canada, the U.S., Australia and Argentina, employing approximately 12,800 people.

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