The COVID-19, engine of acquisitions for Saputo?

La COVID-19, moteur d’acquisitions pour Saputo?

Photo: Graham Hughes The canadian Press
The company Saputo believes that the pandemic might enable him to swallow some of its competitors who have not strong enough to survive.

If it will likely be over a year for Saputo to absorb the effects of the COVID-19, the dairy processor is believed that the pandemic might enable him to swallow some of its competitors who have not strong enough to survive.

Generally, the multinational based in Montreal studying at the same time between three and four acquisition possibilities, said Thursday its chairman and chief executive, Lino Saputo son, during a conference call to discuss results for the fourth quarter.

“There are more folders, because our phone is ringing “, he launched to the analysts.

If Saputo can perform some pre-checks in a virtual way, the president explained that the travel restrictions put in place to limit the spread of the new coronavirus are a hindrance when one enters in the phase to finalize a transaction.

For the moment, some of the companies who are having difficulties are ready to divest itself of assets that are not always interesting, but this could change if the situation does not improve, is believed Mr Saputo son.

“We’re in a fantastic position to stay on the side lines and wait for the right opportunity presents itself “, he said, without giving a timeframe.

Acquisitions have always been at the heart of the growth strategy of the company, which, not later than the last year, has set foot in Europe by extending $ 1.7 billion CDN in order to put the hand on the british company Dairy Crest Group.

Saputo magazine currently in Europe, North America, Australia, Latin America as well as in New Zealand — the only market where the company is not currently physically present. At march 31, the company had approximately $ 320 million in cash and had access to credit facilities of $2.8 billion.

A more difficult end

However, Saputo has completed its most recent fiscal year by posting a decline in its profits while the pandemic COVID-19 has pushed the demand to the place of its products towards the end of the fourth quarter, where its performance has missed the target for the analysts.

Even if the new coronavirus has had a positive impact on profits in the services offered to retailers, such as grocery chains, this will not be sufficient to offset the decrease-side food service and industrial, which usually account for 51 % of its turnover.

“What we are seeing, it is that it will take a few quarters to get back to normal,” said Mr. Saputo son, when questioned about the forecast the company to the effect that it would be more than 12 months to return to the levels of the fiscal year that just ended.

In the fourth quarter ended march 31, Saputo saw its net profit decline of about 29 percent, to $ 88.7 million, or 22 cents per share. The company recorded a charge of 44.8 million $ because of a loss due to inventory unsaleables as well as the reduction of certain sales prices on the north american market.

Excluding non-recurring items, the profit adjusted for the fourth quarter was $ 116.5 million $, or 24 cents per share, down 12.9 % compared to a year ago. Revenues were up 15 %, to 3.72 billion $, in particular thanks to the contribution of acquisitions.

Analysts had been pencilling in adjusted earnings per share of 34 cents and revenue of $ 3.5 billion, according to the firm’s financial data Refinitiv.

“With good reason, the tone adopted by Saputo on the outlook is cautious,” said the analyst Irene Nattel, of RBC capital Markets, in a note sent to investors. It stresses that the impact of the COVID-19 has, however, been limited on the income of the company.

With respect to the fiscal year, the net profit of Saputo declined by about 23 %, to 582,8 million $, while revenues rose 11 % to reach 14,94 billion $.

On the Toronto stock Exchange, the title of Saputo has ended 33.12 $, down 2 %.

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