Saputo Inc (SAP.TO), Canada's largest dairy producer, reported lower-than-expected quarterly profit on Wednesday and said it expects a challenging dairy market in the current fiscal year.
The results and outlook reflect the stiff competitive pressure in the dairy business, which can influence Saputo's cost structure and pricing, said Morningstar analyst Erin Lash.
"We're not surprised that they're facing some headwinds. We don't see those pressures abating," she said.
Saputo's shares were down C$1.02 or 2 percent at C$49.50 in early afternoon trading in Toronto while the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 1.2 percent.
Net income rose to C$100.5 million ($97.6 million), or 51 Canadian cents a share, in the fourth quarter, compared to a net loss a year earlier due to a goodwill impairment charge. Revenue grew by 20.5 percent to C$2.05 billion.
Adjusting for one-time costs, including C$9.6 million (C$6.1 million after tax) related to the acquisition of U.S.-based Morningstar Foods and also the costs of plant closures in Europe and Canada, Saputo earned C$129.2 million or 65 Canadian cents per share, up from C$122.4 million or 61 cents a share a year earlier.
Analysts were expecting Saputo to earn 72 Canadian cents per share on revenue of C$2.15 billion, according to Thomson Reuters I/B/E/S.
The Montreal-based company is among the top three cheese producers in the United States and the second-largest North American dairy company, after acquiring Morningstar Foods in January 2013.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Phil Berlowitz)
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