Saputo Inc. will close two Canadian facilities, cutting nearly 300 jobs, as it looks to trim costs in a competitive market.
The Montreal-based dairy and cheese company announced Thursday it plans to close a Trenton, Ont., facility this September, and a Saint John, N.B., one in January 2021.
About 280 employees will be impacted, the company said, adding they will be provided severance and some will be offered the chance to transfer to other locations. Production from these sites will be integrated into other Saputo facilities in Canada.
"In Canada, the landscape remains competitive," said Lino Saputo, chief executive, during a conference call with analysts after the company released its third-quarter financial results.
Saputo recorded lower sales of fluid milk in the quarter ended Dec. 31, 2019, which dragged down consolidated revenues. Third-quarter revenue totalled $3.89 billion — up from $3.58 billion the same quarter the previous year.
The company plans to control what they can in this business and rightsize it as required, he said.
"Though never an easy decision to make, this includes the upcoming closures" of these facilities, he said.
Saputo also announced plans to diversify its product offerings by pursuing more plant-based opportunities, which it called an important consumer trend. It appointed a senior vice-president in business development for plant-based food to lead these plans.
The appointment shows "its seriousness in this segment," wrote Irene Nattel, an RBC Dominion Securities Inc. analyst, in a note.
"We need to be where consumers are," the chief executive said, saying it needs to leverage its expertise, including that in manufacturing, and that its current facilities are able to process more fluid products — dairy or non-dairy.
The company will also look to develop non-dairy products that taste better, among other things, said Kai Bockmann, president.
"Because the stuff that's out there today is pretty blah."
Still, the company doubled down on remaining a dairy company.
"Dairy is not dead. There is still great life in dairy," said Saputo.
"Anything we do in plant-based is going to be an add-on to be able to leverage some of our expenses."
Saputo reported a third-quarter profit of $197.8 million or 48 cents per diluted share compared with a profit of $342.0 million or 87 cents per diluted share a year ago.
On an adjusted basis, Saputo earned 50 cents per diluted share for the quarter, up from an adjusted profit of 44 cents per diluted share in the same quarter last year.
Source : FCC