CANADA – Saputo, a Canadian dairy giant, has reported a net loss of C$124 million in its third quarter due to a C$265 million (US$196.8 million) impairment charge linked to its Australia dairy division.

Lino Saputo Jr., Chairman, President, and CEO, attributed the non-cash impairment charge to a decline in milk supply and a mismatch in cheese and ingredient prices.

The impairment charge was a result of reduced estimates of future discounted cash flow for Saputo’s dairy division in Australia.

The company cited the increasing disconnect between international cheese and dairy ingredient market prices and the farmgate milk price, especially in the context of a declining milk pool in Australia.

“Despite facing uncertainty in near-term market dynamics, Saputo is committed to maximizing results in its Australian division.”

Meanwhile, the company has been optimizing its manufacturing network in Australia, reducing the number of plants from 11 to 6.

While the CEO acknowledged the challenges, he affirmed that the overall strategy for the Australian market remains unchanged.

Saputo’s Q3 revenue dropped 7% to C$4.3 billion and adjusted EBITDA fell 16.9% to C$370 million. The CEO emphasized the persistently volatile global dairy commodity markets and challenges in consumer behavior.

However, Saputo assured to remain confident in its long-term strategy, aiming for an adjusted EBITDA target of C$2.125 billion by 2025.

He acknowledged the ongoing challenges in the global dairy industry, citing a slowdown in milk production worldwide and noted economic challenges for dairy farmers and additional pressures related to Environmental, Social, and Governance (ESG) factors.

He revealed that he is cautious about the recovery speed but remains focused on factors within its control, such as operational excellence, capital projects, cost containment, and cash flow generation.

Looking ahead, Saputo anticipated continued volatility and challenges in the market, including input costs, currencies, consumer dynamics, and political factors.

“Despite the uncertainties, the company maintains confidence in the overall health of the business and growth drivers.”

Additionally, he highlighted the resilience of consumers domestically, while acknowledging that the international market poses uncertainties for the dairy industry as a whole.

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