Saputo Inc recorded a $141.3 million (C$124 million) loss in the third quarter of FY24, as the dairy giant logged a $196.8 million (C$265 million) non-cash goodwill impairment against its Australia dairy division.
Saputo president, CEO, and chair, Lino Saputo Jr, said the non-cash impairment was due to a disconnect in international cheese and dairy ingredient prices and farm gate milk prices because of declining milk production in Australia.
The amount represented the total value of goodwill for the Australia Cash Generating Unit (CGU).
Saputo Dairy Australia is the country’s largest dairy processor, with brands including Cheer, Cracker Barrel, Devondale, King Island Dairy, Liddells, Mersey Valley, Mil Lel, South Cape, Tasmanian Heritage, and dairy derived nutritional and functional ingredients. It is #9 on the 2024 Top 100 Food & Drink Companies report.
Since Saputo Jr announced the company’s Global Strategic Plan in September 2022, its Australian business has closed its Maffra plant in Victoria and partially closed operations at three others – Cobram and Leongatha in Victoria, and the Mil-Lel plant in South Australia.
In its 8 February statement, the company said as part of its network optimisation activities, 11 plants will be consolidated into six. It also said there was $7.98 million (C$7 million) in employee-related costs that were related to consolidations in its Australian operations.
In April 2023, Saputo and Coles announced a plan for Coles to acquire two automated milk processing facilities from Saputo for around $105 million. SDA said it intended to then sell its fresh milk manufacturing sites at Laverton North (Victoria) and Erskine Park (New South Wales). ACCC raised concerns about the deal but ultimately approved it in December.
In November, Saputo announced a review of its King Island Dairy plant, including its possible sale. MA Moelis Australia has been engaged to look at all options.
