Canadian dairy giant Saputo has announced plans to shutter six of its U.S. facilities by early 2025, as part of its ongoing efforts to optimize operations and reduce costs. This decision was detailed in a post-Q4 results call by Chief Operating Officer Carl Colizza.
Details of the Closures
Saputo has already closed its Belmont, Wisconsin, and Big Stone, South Dakota, facilities. The previously announced closures of the Lancaster, Wisconsin, plant and the Bardsley facility in Tulare, California, are expected to be completed by the end of the first quarter. Additionally, the company will close its facilities in Green Bay, Wisconsin, and South Gate, California.
The total number of jobs affected by these closures has not been disclosed.
Operational Optimization
Colizza explained that these closures are part of a strategy to reduce duplicate costs and enhance efficiency within Saputo’s network. The consolidation efforts will focus on optimizing the Franklin, Wisconsin facility, which will absorb the operations from the closing sites.
Saputo is also engaged in several capital projects to support its growth in the U.S., including establishing new facilities and expanding capacity for key product categories. These projects include a new automated cut-and-wrap facility in Franklin, which is expected to be fully operational in the coming months.
Financial Performance and Future Plans
In a statement accompanying the Q4 results, CEO Lino Saputo, who will step down in August, highlighted the company’s resilience despite a challenging macro-economic environment characterized by commodity price volatility, a struggling consumer base, and ongoing inflationary pressures.
Saputo reported revenues of C$4.54 billion for the quarter ending March 31, marking a 1.7% increase year-on-year. However, adjusted EBITDA decreased from C$392 million to C$379 million, and net earnings dropped from C$159 million to C$92 million. For the full fiscal year, revenues were C$17.34 billion, down from C$17.84 billion the previous year. Adjusted EBITDA fell from C$1.55 billion to C$1.50 billion, and net earnings plummeted from C$622 million to C$265 million.
Strategic Investments
Despite the closures, Saputo continues to invest in its global network. CEO Lino Saputo emphasized that fiscal 2024 was a year of significant progress, with major capital projects under the Global Strategic Plan nearing completion and several facilities ramping up commercial production.
When asked about the financial impact of these initiatives, Colizza noted that previously announced initiatives in the U.S. are expected to generate close to C$100 million in savings by the end of fiscal 2025, out of a total of C$200 million in planned savings.
Challenges in the Australian Market
In addition to its U.S. operations, Saputo has faced challenges in its Australian dairy division. The company booked a loss in the third quarter due to a C$265 million impairment charge related to this division.
Conclusion
Saputo’s decision to close six U.S. facilities reflects its broader strategy to streamline operations and reduce costs amidst challenging economic conditions. The company remains focused on optimizing its global network and investing in growth initiatives to sustain its competitive edge in the dairy industry.
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