Saputo Boosts Profitability
Saputo's Q4 Earnings Climb Amid Revenue Dip, Strategic Argentina Stake Sale
Key Points
In Q4, Saputo posted net earnings from continuing operations of C$157 million (C$0.38 per share), up from C$87 million (C$0.21 per share) a year earlier, while revenues fell 5.5% to C$4.18 billion (from C$4.41 billion), reflecting lower U.S. dairy commodity market pricing.
Saputo also reported adjusted net earnings from continuing operations of C$169 million (C$0.41 per share) in the quarter versus C$145 million (C$0.34 per share) a year earlier, with adjusted EBITDA rising to C$386 million from C$367 million.
For the full fiscal year ended March 31, 2026, Saputo’s sales were CAD 17,551 million (vs. CAD 17,812 million a year earlier), and net income was CAD 672 million compared with a net loss of CAD 176 million; basic earnings per share from continuing operations were CAD 1.68 (vs. basic loss per share of CAD 0.35).
Saputo’s results presentation indicated that, alongside lower U.S. dairy commodity pricing, “higher selling prices across domestic and international cheese and dairy” helped, while “increases in wages, stock-based compensation, and planned investments in advertising and promotions” were also factors weighing on results.
Saputo Inc. posted a sharp earnings recovery in its fourth quarter, with net earnings from continuing operations jumping to C$157 million from C$87 million a year earlier, according to GlobeNewswire. The Montreal-based dairy giant also swung to a full-year net income of C$672 million for fiscal 2026, reversing a C$176 million net loss the prior year.
The gains came even as revenue slipped. Fourth-quarter sales fell 5.5% to C$4.17 billion, hurt by weaker U.S. dairy commodity prices, Barchart reported. But cost cuts and factory upgrades helped push profits higher despite the revenue drop.
Factory Upgrades Drive Profits Despite Falling Revenue
Saputo's adjusted EBITDA — a measure of core operating profit — rose to C$386 million in Q4 from C$367 million a year earlier, according to GuruFocus. The EBITDA margin widened to 9.2% from 8.3%. CEO Carl Colizza credited a multi-year push to modernize and automate factories. The investment lowered unit costs and improved how much product each plant could handle.
For the full fiscal year, operating cash flow surged 26.3% to C$1.508 billion, Quartr reported. Capital spending fell to C$339 million in fiscal 2026, down from a peak investment phase. Saputo said its network modernization is now largely complete, shifting the company from a spending phase to an earnings-delivery phase.
Saputo Sells 80% of Argentina Unit to Peru's Grupo Gloria
In February 2026, Saputo agreed to sell an 80% stake in its Argentine dairy division to Gloria Foods, part of Peru's Grupo Gloria conglomerate, for approximately C$855 million (US$630 million), according to GlobeNewswire. The unit, called Molfino Hermanos, runs two plants and owns legacy brands like La Paulina and La Ricrem. Saputo entered Argentina back in 2003.
Colizza said the deal "enhances financial flexibility and supports targeted reinvestment in platforms that offer the highest growth opportunities." By keeping a 20% minority stake, Saputo retains some Argentina exposure while cutting its risk from the country's peso volatility and inflation. Net proceeds of C$543 million are expected to fund capital projects in fiscal 2027, FoodBev Media reported.
Stock Slips as Adjusted EPS Misses Analyst Targets
Despite the strong earnings swing, Saputo's stock fell roughly 2.41% on June 5 after the earnings call. Adjusted earnings per share came in at C$0.41, missing the analyst consensus of C$0.4675, according to Investing.com. Full-year revenue of C$17.55 billion also fell short of the prior year's C$17.81 billion, weighed down by soft U.S. dairy commodity pricing throughout the year.
Not all analysts were concerned. Scott Marks of Jefferies kept a "Buy" rating with a C$53 price target, citing a "richer product mix" and "continued operational efficiencies," according to TipRanks. Separately, Simply Wall St estimated Saputo's intrinsic value at C$76.24, suggesting the stock trades at a steep discount after its margin recovery.
Higher Wages and Ad Spending Could Weigh on Next Year
Saputo flagged several cost pressures ahead. Management warned that wage inflation and planned increases in advertising and promotional spending would weigh on results in fiscal 2027, Barchart reported. Higher selling prices across cheese and dairy categories helped results in fiscal 2026, but those gains were partially offset by rising compensation and brand investment costs.
The company said it plans to spend C$515 million on capital projects in fiscal 2027, up from C$339 million this past year. Leverage improved significantly — net debt fell to 1.7 times adjusted EBITDA, and the Argentina sale would push that ratio down further to 1.37 times, according to Investing.com. Saputo also repurchased 19.2 million shares for C$679 million in fiscal 2026.
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