Saputo Earnings Rise as Dairy Giant Targets Protein Growth and Accretive Deals

Key Points

• Fiscal 2026 earnings improved: Adjusted EBITDA rose 10.4% to C$1.66 billion, adjusted net income increased 18% to C$751 million, and operating cash flow climbed 26% to C$1.51 billion despite a 1.5% revenue decline.
• Saputo strengthened its balance sheet and shareholder returns: Net debt fell to 1.47 times adjusted EBITDA, while the company repurchased about C$679 million of shares and raised its quarterly dividend 5% to C$0.21 per share.
• Growth priorities are shifting toward higher-value dairy: Saputo plans to emphasize protein, premium ingredients, snacking, food service, automation and targeted accretive acquisitions, supported by expanded U.S. high-protein capacity and a strong fiscal 2027 start.

Saputo TSE: SAP reported higher fiscal 2026 earnings and outlined plans to prioritize value-added dairy categories, targeted investments and potentially accretive acquisitions as it enters fiscal 2027 with lower leverage and expanded financial flexibility.

At the company’s annual shareholders meeting, Chief Financial Officer Maxime Therrien said fiscal 2026 adjusted EBITDA from continuing operations rose 10.4% to C$1.66 billion, while adjusted EBITDA margin expanded by more than 100 basis points to 9.5%.

Revenue from continuing operations declined 1.5% to C$17.55 billion, primarily due to lower U.S. dairy market prices. Higher sales volumes, particularly in North America, as well as higher cheese and dairy-ingredient selling prices in domestic and international markets, partly offset that effect, Therrien said.

Fiscal 2026 Earnings, Cash Flow and Capital Returns

Adjusted net income from continuing operations increased 18% to C$751 million, or C$1.82 per share. Net income from continuing operations was C$690 million, compared with a loss in the prior year, which included non-cash impairment charges related to goodwill and intangible assets in the company’s U.K. dairy division.

Net operating cash flows from continuing operations rose 26% to C$1.51 billion, which Therrien attributed to inventory and working-capital management.

• Capital expenditures totaled C$339 million.
• The company repurchased and redeemed 19.2 million shares for about C$679 million under its normal course issuer bid.
• Saputo paid C$329 million in dividends during the year.
• Net debt to adjusted EBITDA stood at 1.7 times at March 31, 2026, and 1.47 times as of the meeting date, below the company’s long-term target of 2.25 times.

Therrien said the board increased the quarterly dividend by 5% to C$0.21 per share. The dividend is scheduled to be paid Sept. 25 to shareholders of record on Sept. 15, 2026. Subject to Toronto Stock Exchange approval, Saputo also plans to increase its share redemption program to about 24 million shares, the maximum authorized.

Segment Results and Network Investments

In Canada, revenue increased 5% to C$5.4 billion and adjusted EBITDA rose 7.7% to C$697 million, producing a 12.9% margin. Therrien cited volume growth, automation investments and packaging initiatives.

The U.S. segment generated adjusted EBITDA of C$672 million, up more than 9%, with margin improving to 8.1%. The company completed the closure of its Green Bay facility, increased production at its Franklin plant and commissioned its Caledonia distribution center. A C$180 million investment in Waupun increased high-protein ingredients capacity by about 35%, according to Therrien.

Australia, which now comprises the company’s international segment, posted adjusted EBITDA of C$162 million, up 20%, with a 6.3% margin. Higher international cheese and dairy-ingredient prices, growth in high-protein ingredients and private-label gains supported results, though higher milk costs and reduced milk availability created headwinds.

The European sector reported adjusted EBITDA of C$128 million, up 21%, and a 10.1% margin. Saputo pointed to the consolidation of cheese packaging operations in Newton, the discontinuation of certain functional dairy ingredients and inventory-management measures.

For the first quarter of fiscal 2027, Saputo reported adjusted EBITDA of C$427 million, up nearly 8% year over year. Adjusted net income from continuing operations was C$199 million, or C$0.49 per share. Revenue increased 1.5%, while adjusted net income rose 13% and adjusted earnings per share increased 17%.

Strategy Focuses on Protein, Brands and Efficiency

President and Chief Executive Officer Carl Colizza said the company will focus capital, talent and commercial efforts on a smaller set of geographies and higher-value dairy opportunities, including protein, snacking, premium ingredients, food service and value-oriented offerings.

“The heavy capital cycle behind our network modernization is complete, and the returns are now compounding,” Colizza said. He said Saputo intends to deploy capital toward structural growth opportunities and value-added cultured, protein and functional segments, while also pursuing targeted strategic investments and accretive mergers and acquisitions.

Colizza said the company is embedding data, automation and artificial intelligence into demand planning, supply-chain visibility and commercial decision-making. He also said Saputo exited fiscal 2026 with some of its strongest customer-service levels.

Responding to shareholder questions, Colizza said Saputo’s U.S. platform is better positioned to manage milk and block-price volatility following recent investments, supported by its production network, brands and portfolio. On acquisitions, he said the company’s approach is focused on commercial growth and portfolio support rather than deal size.

Executive Chair Lino Saputo said the company’s announced divestiture of a majority interest in Argentina reflected its strategy to focus on four leading platforms: Canada, the U.S., Australia and the U.K. He said proceeds from the Australian plant sale would be available for reinvestment in the company’s Australian platform.

Shareholders Approve Board, Auditor and Pay Resolution

Shareholders elected all 11 director nominees, with at least 96% of votes cast in favor of each nominee. Colizza was elected as a director for the first time. Annette Verschuren did not stand for re-election after 13 years of service on the board and audit committee.

Shareholders also approved KPMG’s appointment as auditor with approximately 99% support and approved the advisory executive-compensation resolution with approximately 95% support. Two shareholder proposals submitted by the Mouvement d’éducation et de défense des actionnaires were rejected, with more than 99% voting against the first proposal and about 92% voting against the second.

About Saputo (TSE:SAP)

Saputo, one of the top ten dairy processors in the world, produces, markets, and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products, and dairy ingredients. Saputo is a leading cheese manufacturer and fluid milk and cream processor in Canada and a leading dairy processor in Australia. In the USA, Saputo ranks among the top three cheese producers and is one of the top producers of extended shelf-life and cultured dairy products.

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