Saputo Closing Several Plants, Spending $133M to Upgrade Others

In the U.S., the company is closing a cut-and-wrap plant in central California.

Saputo

Feb 10, 2022

A Google Street view of Saputo's dairy factory in Lena, WI.

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MONTREAL — As part of the Optimize and Enhance Operations pillar of the company’s Global Strategic Plan, Saputo Inc. announces Feb. 8 several major capital investments and consolidation initiatives intended to enhance and streamline its manufacturing footprint in its USA Sector and International Sector. These planned activities are consistent with the previously announced Global Strategic Plan designed to create shared value for all stakeholders.

In the USA Sector, as a first phase, the company plans to invest approximately US$133 million towards the modernization and expansion of its cheese manufacturing facilities in Wisconsin and California and to support its growth plan in the retail market segment. These initiatives will begin in the fourth quarter of fiscal 2022 and are expected to take approximately 24 months to implement. Complementing this first phase, Saputo plans to consolidate the cut-and-wrap activities in its West Coast operations, and right-size its footprint by closing its Bardsley Street, Tulare, CA facility in fiscal 2023. The impact on employees is expected to be minimal as opportunities for employment will be available at other Saputo facilities in Tulare.

In the International Sector, the Company will be streamlining operations in two of its manufacturing facilities in Australia. A limited number of employees will be impacted. These employees will be provided with severance and outplacement support, and Saputo is exploring redeployment opportunities for some of the affected employees.

“Staying true to our disciplined approach and commitment to shareholder value creation, we are executing our Global Strategic Plan with intention and precision. Today’s announcement is the first in a series of investments and consolidation activities that will increase efficiency and productivity, improving our ability to meet the evolving needs of our customers and consumers,” said Lino A. Saputo, Chair of the Board, President and Chief Executive Officer. "Our five strategic pillars are expected to fuel strong organic growth and this step in our journey lays the groundwork to improve our product portfolio, modernize our processes, enhance capacities, and enable us to pursue initiatives to deliver against our growth objectives.”

The capital investments and consolidation initiatives outlined above are expected to result in annual savings and benefits gradually, beginning in fiscal 2023, and reaching approximately US$88 million (US$65 million after tax) by the end of fiscal 2025. Costs connected with the capital investments and consolidation initiatives outlined above will be approximately US$36 million after tax, which include a non-cash fixed assets write-down of approximately US$31 million after tax. These costs will be recorded in the fourth quarter of fiscal 2022.

Saputo 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 one of the top ten dairy processors in the world, a leading cheese manufacturer and fluid milk and cream processor in Canada, the top dairy processor in Australia, and the second largest in Argentina. In the USA, Saputo ranks among the top three cheese producers and is one of the largest producers of extended shelf-life and cultured dairy products. In the United Kingdom, Saputo is the largest manufacturer of branded cheese and a top manufacturer of dairy spreads. Saputo products are sold in several countries under market-leading brands, as well as private label brands.