Saputo indicates a resurgence in expansion efforts
In a recent development, Canadian dairy processing giant Saputo has reported better-than-expected results for the first quarter ended June 30, 2026. The company's President and CEO, Carl Colizza, admitted that the company's ability to meet demand had improved, thanks to more efficient operations.
The financial performance of Saputo for Q1 2026 shows a modest revenue increase and positive earnings outlook. The company reported revenues of approximately CAD 4.63 billion, up 0.5% from the prior period, driven by higher selling prices in both domestic and international cheese and dairy ingredient markets. Adjusted EBITDA also improved to CAD 426 million from CAD 383 million in the previous comparable quarter. The company’s net income for the period was CAD 165 million, with adjusted earnings per share of CAD 0.44, which notably exceeded consensus forecasts despite slightly missing on sales volume.
Analysts across various Canadian banks and brokerages, including National Bank Financial, have raised their price targets and earnings per share estimates for Saputo’s upcoming fiscal years. Estimates for FY 2027 EPS range up to CAD 2.16, with consensus recommendations leaning towards "Moderate Buy" or "Outperform" ratings. This sentiment suggests confidence in Saputo’s growth driven by operational efficiency and successful execution of capital projects.
Saputo's operations have been robust in Canada, the United States, and Europe. In Canada, strong pricing power in domestic markets helps maintain steady revenue growth. In the United States, increased selling prices in the cheese and dairy ingredient segments contribute to revenue gains. Europe, though not detailed in the latest press releases, contributes to the revenue growth through better pricing strategies and market dynamics.
RBC Capital Markets analyst Irene Nattel noted that Saputo had beaten expectations despite headwinds, while TD Securities analyst Michael Van Aelst stated that margins in Canada reached a 12-year high for the first quarter. Furthermore, margins in the United States are at their best in five years, and margins in North America are at a high not seen in a long time.
Nattel also observed that Saputo's more than $2 billion investments in efficiency, productivity, and network optimization had finally started to pay off. The abundance of milk available for Saputo, coupled with favourable milk prices in the United States compared to international prices, boosts Saputo's exports.
Saputo stock gained $2.10, or 7.15%, to $31.48 on the Toronto Stock Exchange in the afternoon, reflecting investor confidence in the company's growth prospects. Activities were robust in all three regions, with production and volumes improving for Saputo.
In summary, Saputo’s recent quarterly financial results, coupled with positive analyst outlooks, indicate continued steady performance and growth across Canada, the US, and Europe, underpinned primarily by effective price management and operational execution.
Following the positive Q1 2026 results, Saputo's capital projects in Europe are expected to contribute further to the company's growth, as better pricing strategies and market dynamics generate revenue. Additionally, French investment banks and financial institutions may show interest in Saputo's expansion, given its robust financial performance and positive outlook in the business and finance sectors.
