USA – Saputo Inc., a major dairy company in the USA, has announced the permanent closure of its manufacturing facility in Lancaster, Wisconsin, USA.

The decision is part of the company’s network optimization initiatives to increase operational efficiency and capacity utilization in its USA sector while improving its cost structure.

The closure of the Lancaster facility is expected to result in costs of approximately US$4.39 million after taxes, including a non-cash fixed assets write-down of approximately US$ 2.93 million after taxes. The costs will start to be recorded in the third quarter of fiscal 2024.

Around 100 employees will be impacted by the facility’s closure and will be allowed to relocate to other Saputo facilities, and if suitable positions are not available, they will be provided with severance and outplacement support.

Saputo plans to transition production from the Lancaster facility, along with its facility in Belmont, Wisconsin, to its recently converted state-of-the-art goat cheese manufacturing facility in Reedsburg, Wisconsin.

Both the Lancaster and Belmont facilities are expected to close in the fourth quarter of fiscal 2024.

Lino A. Saputo, Chair of the Board, President, and CEO of Saputo Inc., stated that these network optimization initiatives are in line with their global strategic plan and are aimed at strengthening the competitiveness and long-term performance of their USA cheese network.

“The network optimization initiatives announced today will increase operational efficiency and capacity utilization in our USA Sector, while further improving our cost structure.”

In August of the previous year, Saputo announced the closure of another plant in the state. The cheese factory located in Belmont was slated to shut down in the same quarter as the Lancaster facility.

Saputo has recently converted a third plant in Wisconsin. The facility in Reedsburg will take on the production activities previously carried out in Lancaster.

Saputo, recognized as one of the world’s top ten largest dairy companies based on annual turnover, is scheduled to publish its second-quarter financial results next week.

In the first quarter of Saputo’s current financial year, the company’s revenue fell by 2.8% to C$4.2 billion (approximately US$3.05 billion).

The “adjusted” EBITDA increased by 4.3% to C$362 million, but Saputo acknowledged that it would not meet a target it had set for that metric by its fiscal 2025 year due to declining consumer demand and ongoing “market headwinds.”

In April, Saputo announced plans to sell two factories in Australia to Coles, the country’s second-largest grocer.

However, in September, Australia’s competition regulator delayed its decision on the deal.

The Australian Competition and Consumer Commission (ACCC) was initially due to present its conclusions on September 14 but stated that it was still gathering feedback from “parties” that had previously expressed concerns over the deal.