Financial fortunes are sagging for a dairy company that’s getting ready to eventually pull out of Burnaby.
Dairy giant Saputo Inc. struggled in its second quarter with sinking profit despite stable revenue as a perfect storm of COVID-19 disruptions, labour shortages and supply chain turmoil weighed on the company's bottom line.
"It’s clear we're still facing considerable headwinds," Lino Saputo Jr., board chair and CEO of the Montreal-based dairy processor, said during a conference call with analysts on Thursday.
"We continue to feel the lingering disruptions of the pandemic and with economies reopening, we're particularly challenged with access to labour, supply chain difficulties and inflationary pressures."
Saputo earned $98 million or 24 cents per diluted share for the three months ended Sept. 30, plummeting 42.7 per cent from $171 million or 42 cents per share a year earlier.
Saputo's adjusted profits dropped 37 per cent to $116 million, from $184 million in the second quarter of 2020.
The results come as Saputo fires up a new “state-of-the-art” facility in Port Coquitlam, where fluid milk and dairy alternative beverages will be produced. That makes the future of the Saputo plant on Lougheed Highway next to the Sperling SkyTrain station murky.
Saputo sold the property where the plant is located to a developer for more than $200 million in 2018. The NOW has contacted Saputo for a timeline on when the Burnaby plant will be shut down as the Port Coquitlam facility is set to start up soon.
Meanwhile, Saputo has ushered in price increases to cope with inflation, yet those higher prices are failing to keep up with rising costs.
"Pricing initiatives undertaken during the quarter lagged rising costs, which continue to increase," Saputo chief financial officer Maxime Therrien told analysts.
"The rollout of our pricing initiative will continue to be implemented ... which should further offset some of the cost pressure we are experiencing."
Revenues remained stable at $3.7 billion as an increase in food service sales was offset by lower grocery sales.
- With additional reporting by The Canadian Press
