Saputo Inc. has announced plans to close four plants in North America by the end of 2015. Facilities in Wetaskiwin, Alta., and Glenwood, Alta., as well as two plants in the company’s U.S. food service division, located in New London, Wis., and Hancock, Md., will be shuttered as part of measures to improve operational efficiency. Production will be integrated into other Saputo facilities. A company spokesperson declined to disclose what specific products are made at the plants for competitive reasons.
The company said it is offering severance and outplacement support to the approximately 180 employees affected.
Related to the rationalizations are plans to add approximately $35 million in new fixed assets in other Saputo plants. The company said it would have spent the same amount in capital expenditures to upgrade the affected sites.
Headquartered in Montreal, Saputo produces, markets and distributes dairy products, including cheese, fluid milk, extended shelf-life milk and cream products, culture products and dairy ingredients.
Last year, the company said it would close several plants, including a facility in Winkler, Man., and its Warwick, Que., cheese plant. Saputo also announced its intent to exit the European cheese market after finding business there unprofitable.
Meanwhile, the company continues to pursue growth opportunities in other markets. In February, Saputo won a bidding war for a majority interest in Warrnambool Cheese and Butter Factory Co. Holdings Ltd., one of Australia’s largest milk processors. The announcement came just a few weeks after Saputo entered into an agreement to acquire the fluid milk activities of Scotsburn Co-Operative Services Ltd. based in Nova Scotia.
But Saputo’s interest in expanding its reach really kicked off in January 2013, when the company completed its acquisition of Morningstar Foods, L.L.C., a subsidiary of Dallas-based Dean Foods Co., for $1.45 billion. Lino Saputo, vice-chairman and chief executive officer of Saputo, said shortly after the acquisition’s closing that it “opened up the dairy world” for Saputo.
“I see that in the U.S. space both on the cheese and on the dairy foods side despite our size, we represent a small percentage of the overall volume, so I think that there could be some other potential acquisitions in the U.S.,” Mr. Saputo said during a Feb. 6 conference call to discuss third-quarter results.
Net earnings at Saputo in the third quarter ended Dec. 31, 2013, totaled C$144.1 million, up 11% from C$130 million in the same period a year ago. EBITDA totaled C$260 million, up from C$212.5 million. Revenues increased 30% to C$2,343.2 million from C$1,800.6 million.
