Saputo drops EBITDA target, expects U.S. milk pricing reform to boost profits

CANADA – Saputo has withdrawn its previously set EBITDA target but anticipates a profit boost from a revised milk-pricing formula in the United States. 

The company’s president and CEO, Carl Colizza, stated that market conditions have not stabilized as expected, making it necessary to reassess business strategies while addressing cost and resource structures. 

Saputo had introduced an adjusted EBITDA target of C$2.125 billion for the 2025 financial year under former CEO Lino Saputo Jr., who stepped down last year. 

Reports indicate that the company’s financial performance has been affected by depressed dairy commodity markets, inflationary pressures, and constrained consumer spending.  

Despite these challenges, Saputo reported an EBITDA of C$1.19 billion for the nine months ending December 31, reflecting a 5.3% increase from the previous period. 

However, the company recorded a net loss of C$518 million in the third quarter, largely due to an impairment charge of C$674 million linked to its UK dairy operations.

Addressing analysts, Colizza explained that a new milk-pricing formula announced by the United States Department of Agriculture (USDA) in January would provide some relief when it takes effect in June and December. 

“The changes will be positive for dairy processors and better reflect the operating cost environment within the industry,” he said, emphasizing that the last revision by US authorities occurred 17 years ago.  

The CEO further noted that if the USDA’s changes had been implemented earlier, Saputo’s adjusted EBITDA for the financial year could have increased by an estimated US$60-70 million.

He also addressed concerns regarding potential tariffs on Canadian products if former President Donald Trump reintroduces import taxes. 

While acknowledging some indirect cost implications related to packaging and chemicals, Colizza downplayed the overall impact, stating, “When I take a look at the potential tariff applications that are still lingering, from a direct perspective, there’s not a lot of impact.” 

He added that Saputo’s Canadian and US divisions operate largely independently, with minimal day-to-day interactions.  

Looking ahead, Saputo expects inflationary pressures to persist into the final quarter and the new financial year, particularly in the UK, where such pressures may intensify. 

Reports indicate that milk prices remain high, while costs related to labor, vegetable oils, and utilities continue to rise. 

The CEO highlighted that cost optimization and efficiency will be crucial in mitigating these pressures. 

“Regardless of the external environment, which includes potential tariffs, the foundation and the resilience of our business is strong,” he stated.