Saputo Inc.
TSX : SAP

Saputo Inc.

June 06, 2005 12:42 ET

Saputo: Financial Results For Fiscal 2005, Net Earnings Up 9.3%

MONTREAL, QUEBEC--(CCNMatthews - June 6, 2005) - Saputo Inc. (TSX:SAP) revealed today its financial results for fiscal 2005, which ended March 31, 2005. All amounts are expressed in Canadian dollars unless otherwise indicated.



- Net earnings amounted to $232.1 million or $2.23 (basic) per share,
a 9.3% increase over $212.4 million or $2.05 (basic) per share in
fiscal 2004.

- Revenues totalled $3.883 billion, an increase of $313.0 million or
8.8% compared to $3.570 billion in fiscal 2004.

- Earnings before interest, income taxes, depreciation and
amortization (EBITDA)(1) amounted to $407.8 million, an increase of
$4.5 million compared to $403.3 million in fiscal 2004.

- EBITDA in the Canadian and Other Dairy Products Sector totalled
$244.2 million, as compared to $209.9 million a year earlier, an
increase of $34.3 million or 16.3%. The EBITDA margin in this
sector climbed from 9.7% in the previous fiscal year to 10.1% in
fiscal 2005. During the year, this sector experienced increased
volumes in all its divisions. Included in our EBITDA for fiscal
2005 is a $2.6 million gain on disposal of fixed assets held for
sale.

- EBITDA in the US Dairy Products Sector totalled $137.0 million, a
$23.9 million or 14.9% decrease compared to $160.9 million posted
in fiscal 2004. Although the sector experienced a more favourable
average block market2 per pound of cheese, it was negatively
affected by the relationship between the average block market per
pound of cheese and the cost of milk as raw material.

- EBITDA in the Grocery Products Sector amounted to $26.6 million, a
drop of $5.9 million from that of the previous fiscal year. The
EBITDA margin dipped from 19.4% in fiscal 2004 to 16.7% in fiscal
2005. The sector was affected throughout the fiscal year by reduced
revenues, and additional pension, raw material, packaging and
labour costs.

- Cash generated by operating activities before changes in non-cash
working capital items totalled $305.3 million for fiscal 2005,
slightly higher compared to the $301.3 million for fiscal 2004.

- Repayment of approximately $113 million of long-term debt and bank
loans, issuance of shares for a cash consideration of $13.5 million
as part of the Stock Option Plan, and payment of $59.5 million in
dividends.

Summary of Fourth Quarter Results

- Net earnings reached $59.7 million, an increase of $1.6 million
from the same quarter in fiscal 2004.

- Revenues totalled $916.8 million, a decrease of 3.1% compared to
$945.9 million for the same quarter last fiscal year. The decrease
is attributed to our US Dairy Products Sector and our Grocery
Products Sector. The appreciation of the Canadian dollar eroded
approximately $24 million in revenues. This was partially offset by
a higher average block market per pound of cheese, which increased
revenues by $15 million. The Grocery Products Sector experienced
reduced revenues of approximately $7 million principally due to
reduced volumes in relation with the price increases implemented in
February 2005 and Easter Holidays, which occurred during the fourth
quarter and which traditionally is a slow period for the sector.
Revenues from our Canadian and Other Dairy Products Sector were
slightly lower in comparison to the same period last fiscal year,
mainly due to lower volumes in our Canadian cheese activities.

- EBITDA for the fourth quarter totalled $103.3 million, a $3.3
million decrease from the same period last fiscal year.

- EBITDA from our US Dairy Products Sector decreased by approximately
$13 million compared to the corresponding period last fiscal year.
The appreciation of the Canadian dollar along with an unfavourable
relationship between the average block market(2) per pound of
cheese and the cost of milk as raw material were the driving
factors behind the decrease.

- The EBITDA of our Canadian and Other Dairy Products Sector
increased by approximately $12 million in comparison to the
corresponding period last fiscal year. The increase is attributed
to the benefits derived from rationalization activities undertaken
in the prior fiscal year, for which fiscal 2004 fourth quarter
included $2.7 million in rationalization expenses, increased sales
volumes specifically in our specialty cheese category, more
interesting margins achieved in our Argentina operations, and a
gain on disposal of fixed assets held for sale in the amount of
$2.6 million.

- The Grocery Products Sector EBITDA decreased by approximately $2
million as a result of reduced revenues, and additional pension,
raw material, packaging and labour costs.


Outlook

Although no acquisitions were made during the fiscal year, we nonetheless realized growth, and we did so on several levels. It was essentially organic growth that enabled us to generate a return on equity of 18.8%. Our vision for our development embodies a number of components: organic growth, consolidation of our position in current markets, growth by acquisitions, and preparing our future by tailoring our plans accordingly.

Each of our divisions has set itself precise objectives for fiscal 2006, all of which should result in increased revenues, EBITDA, cash flow generated and consolidated net earnings. We are mainly relying on organic growth and improvement in our procedures and our efficiency to achieve continuous growth in our overall profitability.

During fiscal 2005, we started working on the acquisition of two businesses, which were announced during the early months of fiscal 2006. Certainly the Company's larger-scale growth will be by way of acquisitions, and we will continue to toil steadily in that direction. At all levels, our growth will not take place at the expense of our profitability.

Our financial position is excellent, and provides us with considerable flexibility in our future development for the 2006 fiscal year as well as for the coming years. Our destiny is ours alone to shape.

Financial Statements and Management's Analysis

For more information on the results for fiscal 2005 as well as the fourth quarter of fiscal 2005, reference is made to the audited consolidated financial statements and the notes thereto and to our Management's Analysis for the fiscal year ended March 31, 2005. These documents can be obtained on SEDAR at http://www.sedar.com.

Forward-Looking Statements

This press release document contains management's analysis on forward-looking statements. Caution should be used in the interpretation of management's analysis and statements, since management often makes reference to objectives and strategies, which contain a certain element of risk and uncertainty. Due to the nature of our business, the risks and uncertainties associated with it could cause the results to differ materially from those stated in such forward-looking statements.

Dividends

The Board of Directors of the Company declared a dividend of $0.15 per share, payable on July 7, 2005, to shareholders of record as of June 22, 2005. This dividend is for the quarter ended March 31, 2005.

Conference Call

A conference call to discuss the fiscal 2005 results will be held on Monday, June 6, 2005 at 1:30 PM, Eastern time. To participate in the conference dial 1 800 525-6384. To ensure your participation, please dial in approximately five minutes before the call.

To listen to this call on the web, please enter http://events.onlinebroadcasting.com/saputo/060605/index.php in your web browser.

For those unable to participate, an instant replay will be available until midnight, Monday, June 13, 2005. To access the replay dial 1 800 374-8183, passcode 6664568. The conference call will also be archived on the Saputo web site at http://www.saputo.com.

About Saputo

Solid foundations, a commitment to excellence and dedication to growth are the keystones that have enabled Saputo to evolve as the largest dairy processor in Canada, one of the most important cheese producers in North America, the third dairy processor in Argentina and the largest snack cake manufacturer in Canada. Our products, manufactured in 46 plants that stretch from one end of the Americas to the other, are marketed under such well-known brand names as Saputo, Armstrong, Caron, Cayer, Kingsey, Dairyland, Baxter, Nutrilait, Stella, Frigo, Dragone, Treasure Cave, La Paulina, Ricrem and Vachon. Saputo Inc. is a public company whose shares are listed on the Toronto Stock Exchange under the symbol SAP. Propelled by the same sense of dedication that motivates our 8,500 employees to surpass themselves day after day, we will continue to successfully craft our future. Visit our Web site at http://www.saputo.com.



(1) Measurement of results not in accordance with generally accepted
accounting principles
The Company assesses its financial performance based on its
EBITDA, this being earnings before interest, income taxes,
depreciation and amortization. EBITDA is not a measurement of
performance as defined by generally accepted accounting
principles in Canada, and consequently may not be comparable to
similar measurements presented by other companies.

(2) "Average block market" is the average daily price of a 40 pound
block of cheddar cheese traded on the Chicago Mercantile Exchange
(CME), used as the base price for the cheese.


NOTICE
The consolidated financial statements of Saputo Inc.
for the three-month periods ended March 31, 2005 and 2004
have not been reviewed by an external auditor.

CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of dollars, except per share amounts)


For the three-month For the years
periods ended March 31 ended March 31
(unaudited) (audited)
2005 2004 2005 2004
--------------------------------------------------------------------
Revenues $916,825 $945,857 $3,883,069 $3,570,190
Cost of sales,
selling and
administrative
expenses 813,508 839,208 3,475,310 3,166,933
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Earnings before
interest, depreciation
and income taxes 103,317 106,649 407,759 403,257
Depreciation
of fixed assets 16,195 16,808 66,065 66,038
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Operating income 87,122 89,841 341,694 337,219
Interest on long-term debt 6,313 8,000 28,026 34,792
Other interest 1 515 1,064 1,218
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Earnings before
income taxes 80,808 81,326 312,604 301,209
Income taxes 21,091 23,260 80,459 88,844
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Net earnings $59,717 $58,066 $232,145 $212,365
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Per share
Net earnings
Basic $0.57 $0.56 $2.23 $2.05
Diluted $0.57 $0.56 $2.20 $2.03



CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in thousands of dollars)
(audited)



For the years ended March 31 2005 2004
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Retained earnings, beginning of year $711,371 $546,667
Net earnings 232,145 212,365
Dividends (59,462) (47,661)
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Retained earnings, end of year $884,054 $711,371
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NOTE: THESE FINANCIAL STATEMENTS SHOULD BE READ IN CONJUCTION WITH
OUR AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO
AND WITH OUR MANAGEMENT'S ANALYSIS FOR THE FISCAL YEAR ENDED MARCH
31, 2005. THESE DOCUMENTS CAN BE OBTAINED ON SEDAR AT
HTTP://WWW.SEDAR.COM



SEGMENTED INFORMATION
(in thousands of dollars)
For the three-month For the years
periods ended March 31 ended March 31
(unaudited) (audited)
2005 2004 2005 2004
--------------------------------------------------------------------

Revenues
Dairy Products
Canada and Other $576,499 $577,144 $2,415,541 $2,161,852
United States 303,863 325,951 1,308,735 1,240,954
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880,362 903,095 3,724,276 3,402,806
Grocery Products 36,463 42,762 158,793 167,384
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$916,825 $945,857 $3,883,069 $3,570,190
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Earnings before
interest, depreciation
and income taxes
Dairy Products
Canada and Other $66,424 $54,137 $244,161 $209,855
United States 30,536 44,210 137,043 160,887
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96,960 98,347 381,204 370,742
Grocery Products 6,357 8,302 26,555 32,515
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$103,317 $106,649 $407,759 $403,257
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Depreciation
of fixed assets
Dairy Products
Canada and Other $7,441 $8,794 $29,743 $29,854
United States 7,478 7,668 31,175 31,550
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14,919 16,462 60,918 61,404
Grocery Products 1,276 346 5,147 4,634
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$16,195 $16,808 $66,065 $66,038
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Operating income
Dairy Products
Canada and Other $58,983 $45,343 $214,418 $180,001
United States 23,058 36,542 105,868 129,337
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82,041 81,885 320,286 309,338
Grocery Products 5,081 7,956 21,408 27,881
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$87,122 $89,841 $341,694 $337,219

Interest 6,314 8,515 29,090 36,010
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Earnings before
income taxes 80,808 81,326 312,604 301,209

Income taxes 21,091 23,260 80,459 88,844
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Net earnings $59,717 $58,066 $232,145 $212,365
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--------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)

For the three-month For the years
periods ended March 31 ended March 31
(unaudited) (audited)
2005 2004 2005 2004
--------------------------------------------------------------------

Cash flows related
to the following
activities:
Operating
Net earnings $59,717 $58,066 $232,145 $212,365
Items not affecting
cash
Stock based
compensation 1,517 696 4,774 2,936
Depreciation of
fixed assets 16,195 16,808 66,065 66,038
Gain on disposal
of fixed assets (2,489) (529) (2,576) (680)
Future income taxes 3,155 13,253 4,860 20,630
--------------------------------------------------------------------
78,095 88,294 305,268 301,289
Changes in non-cash
operating working
capital items 1,444 (13,203) (28,783) (13,717)
--------------------------------------------------------------------
79,539 75,091 276,485 287,572
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Investing
Business acquisitions - (178) - (99,994)
Portfolio investment - 2,000 - 2,000
Additions to
fixed assets (21,977) (21,491) (81,786) (90,446)
Proceeds on disposals
of fixed assets 4,609 4,911 5,441 5,926
Other assets (2,600) (596) (7,278) (4,677)
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(19,968) (15,354) (83,623) (187,191)
--------------------------------------------------------------------

Financing
Bank loans (19,512) (4,281) (68,844) 63,945
Repayment of
long-term debt (12) (27,517) (43,965) (110,099)
Issuance of share
capital for a cash
consideration 2,704 2,634 13,544 4,931
Employee future benefits (308) (646) 442 4
Dividends (15,671) (12,446) (59,462) (47,661)
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(32,799) (42,256) (158,285) (88,880)
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Increase in cash 26,772 17,481 34,577 11,501
Effect of exchange
rate changes on cash 644 1,548 (974) (2,391)
Cash (bank overdraft),
beginning of period 14,061 (11,155) 7,874 (1,236)
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Cash, end of period $41,477 $7,874 $41,477 $7,874
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Supplemental information

Interest paid $(179) $983 $27,565 $33,889
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Income taxes paid $5,002 $18,768 $37,896 $70,095
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CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(audited)
March 31 March 31
2005 2004
--------------------------------------------------------------------
--------------------------------------------------------------------

ASSETS
Current assets
Cash $41,477 $7,874
Receivables 299,828 287,012
Inventories 452,814 420,660
Income taxes 14,381 9,348
Future income taxes 10,711 14,877
Prepaid expenses and other assets 16,795 13,838
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836,006 753,609
Portfolio investment 53,991 53,991
Fixed assets 648,584 661,183
Goodwill 507,200 524,856
Trademarks 24,054 26,076
Other assets 53,437 46,422
Future income taxes 9,800 3,411
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$2,133,072 $2,069,548
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LIABILITIES
Current liabilities
Bank loans $15,083 $82,367
Accounts payable and accrued liabilities 291,197 295,124
Income taxes 67,438 26,020
Future income taxes 9,653 8,927
Current portion of long-term debt - 43,969
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383,371 456,407
Long-term debt 302,521 327,942
Other liabilities 19,139 13,941
Future income taxes 112,191 114,429
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817,222 912,719
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SHAREHOLDERS' EQUITY
Share capital 483,896 469,262
Contributed surplus 8,095 4,411
Retained earnings 884,054 711,371
Foreign currency translation adjustment (60,195) (28,215)
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1,315,850 1,156,829
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$2,133,072 $2,069,548
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Contact Information

  • Saputo Inc.
    Claude Pinard
    Vice President, Communications
    (514) 328-3377