Canadian dairy group Saputo plans to build a new facility in British Columbia to replace an existing site.
The plant will be located in Port-Coquitlam and is intended to “better serve” the market in western Canada once the project is completed in fiscal 2021, the Montreal-based firm said in its second-quarter earnings announcement.
Saputo’s new factory will replace its existing facility in Burnaby, also in British Columbia, which the company sold in October for CAD209m (US$160.1m). It expects to reap an after-tax gain of around CAD167m from the sale in the third quarter of fiscal 2019.
In the interim, Toronto-listed Saputo has entered into a lease agreement for the same site in Burnaby.
“The company will continue to focus on reviewing overall activities [in Canada] to improve operational efficiencies in order to mitigate pressure on margins, low growth and competitive market conditions,” Saputo said. “The Dairy Division (Canada) will undertake capital projects aimed at increasing efficiencies and maximising its manufacturing footprint in order to maintain a leadership position.”
Saputo reported revenues of CAD6.69bn in the first half ended on 30 September, an increase of 15.8%, led by higher volumes on the back of recent acquisitions. However, lower international selling prices of cheese and dairy ingredients offset the gain.
Ontario-based Shepherd Gourmet was bought by Saputo in May to expand its presence in “speciality” cheese and yogurt. And a month earlier, the Canadian firm got clearance from Australia’s competition watchdog to acquire the operating assets of Murray Goulburn. More recently, but not included in the latest results, the company snapped up F&A Dairy Products.
Elsewhere in Saputo’s first-half results, it posted an 8.6% decline in adjusted EBITDA to CAD626m, while net earnings fell 25% to CAD289m.