Grocers and restaurants are going to get another round of price hikes from the dairy giant.
The company reported a decline in profits in the fourth quarter due to higher input costs.
The cost of everything from milk to packaging is going up as a result of inflation in the supply chain. The company said in an earnings update that freight andlogistics costs increased in the quarter.
Most food manufacturers try to pass on the added costs to their customers. Suppliers in Canada are asking for more money for the same products in unprecedented numbers. The recent price dispute between the two companies was ugly. Despite the squabbling, it is clear that much of the cost increases are making their way onto Canadians' grocery bills.
The price increases led to better-than- expected revenue of $3.96 billion in the quarter ended March 31, up more than 15% compared with the same quarter last year. The extra revenue wasn't enough to keep profits from falling.
The company had an adjusted EBITDA of $303 million last year. The price hikes weren't enough to mitigate the impact of inflation.
The analyst said that the end of the fiscal year amounted to a whimper for the company. She wrote in a report to investors that results matched expectations and that it could be a relief to investors.
As more price increases start to kick in across the network, the management of the company promised a "meaningful recovery" in the coming fiscal year. The company increased its prices in the US in April. The federal body that manages the national dairy supply may raise prices again this year.
The Canadian Dairy Commission, a Crown corporation that controls the farm-gate price that is paid to farmers for their milk, increased prices by a record amount in February. The increase was meant to cover rising costs. After the dairy farmers of Canada reported that production costs have continued to soar in the wake of Russia's invasion into Ukraine, the CDC announced it was considering an uncommon price increase.
The CDC is expected to raise prices again, according to the president of the company.
There is a high chance of that.
In February, Saputo raised prices in Canada. The CDC will raise prices again.
Colizza said that they would recover costs from milk price inputs.
The latest Consumer Price Index report from Statistics Canada shows that dairy prices increased by eight per cent in April compared to the same period last year.
The company booked net earnings of $37 million, or nine cents per share, a drop of about 66 million or 64 per cent, though it said that included restructuring costs. Fourth-quarter profits were $108 million, a decrease of $16 million compared to the same period last year.
The email address is jedmiston@postmedia.
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