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Saputo profit falls on inventory writedown, U.S. market

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Dairy products producer Saputo Inc. (SAP-T) reported a 4-percent fall in first-quarter profit, citing market conditions in the United States and an inventory writedown in Argentina.

Saputo said its European dairy products division continues to face challenges to obtain milk at prices competitive with the selling price of cheese.

The company also said its Canadian dairy products division continues to face challenges in the dairy market.

The company makes and distributes milk, cheese and some baked goods from nearly 50 plants in North America, South America and Europe.

Inventory at the company's Argentina division was written down by $2.5 million due to a selling price fall in the export market at the end of the quarter.

Average block market per pound of cheese fell by 20 cents in the United States, for the quarter, compared to the year-earlier period.

Average block market is the average daily price of a 40 pound block of cheddar traded on the Chicago Mercantile Exchange, used as the base price for cheese.

Dairy processors Saputo, Agropur and Parmalat are the biggest dairy processors in Canada, with Maple Leaf Foods Inc. (MFI-T) and Olymel among the biggest poultry packers.

Canada has 13,200 dairy farms, with Quebec and Ontario accounting for four-fifths of them.

Net earnings fell to $121.8 million, or 60 cents per share, for the April-June quarter, from $126.6 million, or 61 cents per share, a year earlier.

Revenue rose 4 percent to $1.70 billion.

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