Saputo has flagged it is looking to streamline its Australian operation in response to lower milk intake.
Lower milk intake in Australia continued to impact efficiency, Saputo president and chief executive officer Lino Saputo told an analysts' briefing earlier this month, following the release of its first quarter results.
The company announced a 24.1 per cent bounce in global revenues to $CDN4.327 billion ($A4.7 billion) for the quarter to lift profit 19.7pc to $CDN347 million ($A381 million).
Saputo announced streamlining of its troubled US operation with the goat's cheese manufacturing facility in Belmont , Wisconsin, to be closed, while a mozzarella plant in Reedsburg, Wisconsin, will be converted to goat cheese.
The company said reduced milk availability in Australia negatively impacted efficiencies and the absorption of fixed costs.
Despite high milk prices, it flagged that it did not expect milk production in Australia to increase.
"Managing our milk intake is our top priority for this business," Mr Saputo said.
"As part of our global strategic plan, we are continuously reevaluating our Australia network to make sure that we have the right infrastructure in place for the total milk that we have today and that we anticipate over the next few years.
"We're identifying new opportunities to streamline the operating model, and we are confident that our diversified platform will further support earnings as we assess our footprint."
But the company said the increased milk prices had not negatively impacted the business, as it has been able to pass these on to its customers.
READ MORE: Saputo struggling to grow milk volume
It had also been able to change its product mix, targeting higher returning markets.
The company's international and Europe division president and CEO Leanne Cutts said it had been passing on increased costs to its international export customers.
"We've already successfully passed on a substantial portion of the milk cost increase, and we will continue to increase prices as needed to recover those input costs," she said.
"At the same time, foodservice demand continues to rebound in Australia after COVID and domestic retail performance is actually very solid.
"We've also got an ongoing pipeline of a number of new products across the portfolio."
READ MORE: Saputo questions $1 milk
Mr Saputo said the company was not expecting any rollback from prices.
"In all geographies where we operate, we are not seeing any irresponsible behavior by any of our competitors," he said.
"I think everybody suffered over the course of the last 18 to 24 months, especially with inflation and labor and logistical costs.
"There is no irresponsible behavior.
"I think everyone is being pretty responsible about taking price where they need to take price to cover some of their increased costs."
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Carlene Dowie
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
