Saputo Misses Estimates in Q4, Sales Drop on Lower Demand and Prices; Shares Down 6.5%

Shares of Saputo Inc. (SAP) plunged more than 6.5% on Thursday after the Canadian cheese and dairy maker reported disappointing revenues and profits in its fourth quarter.

Since the beginning of the pandemic, Saputo has seen a decline in revenues from the food services and industrial segments, while an increase has been recorded in retail sales. In addition, falling international market prices for cheese and dairy products had a negative impact.

Revenue came in at C$3.44 billion for Q4 2021, a decrease of 7.5% year-on-year. Analysts expected Saputo to post revenues of C$3.66 billion for the quarter.

Meanwhile, profit for the quarter ended March 31 amounted to C$103.1 million (C$0.25 per diluted share), compared to a profit of C$88.7 million (C$0.22 per diluted share) in the prior-year quarter. On an adjusted basis, the Montreal-based company earned C$0.30 per diluted share, C$0.02 higher than a year ago but C$0.09 lower than analysts’ estimate.

Saputo also unveiled its new Global Strategic Plan, which targets high single-digit growth over a four year period. It would bring Adjusted EBITDA to C$2.125 billion by the end of FY 2025. (See Saputo Inc. stock analysis on TipRanks)

Saputo’s Chair of the Board and CEO said, “Through our new Global Strategic Plan, we’re laying the foundation for accelerated organic growth to complement our M&A and Saputo Promise activities. With our recent leadership enhancements, a united USA platform, and key COVID learnings in tow, I strongly believe we’re embarking on this exciting path with the right talent, structure, and strategic roadmap guiding our way. As our collective passion ignites our efforts, I’m confident that together we’ll emerge a bigger, better, and stronger Saputo.”

Last week, Desjardins analyst Chris Li upgraded SAP to Buy from Hold with a C$45.00 price target, for 14.5% upside potential.

The rest of the Street is cautiously optimistic on SAP with a Moderate Buy consensus rating based on 2 Buys and 1 Hold. The average analyst price target of C$43.67 implies 11% upside potential to current levels. Shares have gained 17% over the past year.

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