Canadian dairy giant Saputo is suffering pain, particularly in the United Kingdom and Australia. Due to large goodwill impairments, it has to write off hundreds of millions and has recorded a loss of almost €350 million in the third quarter.
The income from ordinary activities does not look bad. The turnover for the third quarter (ending December 31, 2024) increased by 17%, or the equivalent of €481 million, to €3.359 billion. Also in the first 9 months of the current financial year, a good turnover growth of 11,8% was achieved compared to the same period last year. The result is also positive on average, except in Argentina, where the company suffers from the consequences of hyperinflation (but this can be corrected for tax purposes). In Canada and the US, however, Saputo is doing well.
The pain is now in Australia and, even more so, in the United Kingdom. The markets there are difficult and the returns are disappointing. A higher milk price has to be paid than was calculated and the returns are disappointing.
Factory closures
As a result, Saputo has decided to close a branch in Australia and to tighten its purse strings towards farmers. It has also taken a write-down in the current year worth €178 million.
In the United Kingdom, even more drastic measures were needed. In 2023, a substantial loss was already incurred there due to the sale of overvalued stocks. In the current year, Saputo has taken another close look at all operations there and concluded that a substantial write-down was also necessary here. This has been set at the equivalent of €456 million. A cheese factory in Yorkshire is being closed and in the south, 'unprofitable' dairy farmers are being sold off. This concerns 13 farmers with around 20 million kilos in the area where the cheese factory in Davidstow is being taken in.
Without depreciation, Saputo could have ended the third quarter with a profit of more than €100 million.