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Saputo's net earnings rise on US tax cuts, higher international revenues

Canadian dairy company Saputo Inc. posted a 70.7% year-over-year increase in net earnings in the third quarter of fiscal 2018, as it benefited from tax changes in the U.S. and higher international revenues.

Net earnings rose to C$337.0 million, or 86 Canadian cents per share, in the quarter ending Dec. 31, 2017, from C$197.4 million, or 49 cents per share, in the same period in 2016.

During the quarter, Saputo recorded an income tax benefit of C$178.9 million to adjust for future tax balances and current fiscal year provisions, due to the new U.S. tax law, the company said.

On an adjusted basis, Saputo earned C$183.2 million, or 47 cents per share, in the fiscal third quarter.

Revenues increased to C$3.02 billion in the third quarter from C$2.97 billion a year ago. Revenues from the Canada and U.S. sectors were flat at C$1.06 billion and C$1.59 billion, respectively.

The company's international sector, which consists of dairy divisions in Argentina and Australia, rose to C$373.3 million in the third quarter from C$313.3 million a year earlier. Saputo said higher selling prices and higher sales volumes in both the domestic and export markets drove revenue growth.

Saputo added that its international sector will develop new markets as it continues to pursue sales volume growth in existing markets.

"The Sector will continue to evaluate overall activities to improve efficiencies and aim to maximize its operational flexibility to mitigate volatility in market conditions," the company said.

Saputo is expecting international cheese and dairy ingredient prices to weaken during the first half of the calendar year.