Learn why Saputo Inc. is closing six U.S. plants as part of its strategic changes. What does this mean for the dairy industry and their future growth?
Reviewing its 2024 fiscal performance, Canadian dairy company Saputo Inc. announced strategic decisions, including the intention to eliminate six American plants. This move, along with the closure of factories in Lancaster, Wis., Green Bay, Wis., Tulare, Calif., and South Gate, Calif., underscores our top priority in the US sector-changing our cheese network. Saputo said that its operations in Belmont, Wis., and Big Stone, SD, are already shuttered, further demonstrating our commitment to strategic planning and long-term vision.
As part of our US strategy, Saputo Inc. is ramping up its automated cut-and-wrap plant in Franklin, Wis. This move is a testament to our commitment to innovation and growth as we strengthen our innovation pipeline, produce new products, continue to build brands, and boost volume ‘with key customers.’ Our financial report highlights these goals, instilling optimism about our future prospects in the US sector.
Chair of the board, president, and chief executive officer Lino A. Saputo acknowledged the firm’s ‘solid performance’ in the fourth quarter of 2024. Despite this, the company faced a ‘negative $61 million impact from USA market conditions, specifically related to ongoing market volatility, and $15 million of duplicate operational expenses due to the network optimization initiatives aimed at increasing the operational efficiency and capacity utilization of the company’s USA sector.
These duplicate operational costs were incurred as part of their strategic efforts to transform their cheese network. By closing multiple facilities and ramping up automated processes, they temporarily faced extra costs from running parallel operations during the transition period.
Specifically, the efforts involved:
- Streamlining and modernizing production lines across different plants.
- Integrating advanced automation systems to improve productivity.
- Managing logistical challenges in shifting production capacities efficiently.
These initiatives, although costly in the short term, are expected to pay off by significantly enhancing the company’s operational framework in the long run.
Key Takeaways:
- Saputo Inc. plans to close six facilities in the U.S., part of their strategy to transform their cheese network.
- The company aims to ramp up its automated cut-and-wrap facility in Franklin, Wisconsin.
- Saputo reported a solid Q4 2024 despite facing market challenges and duplicate operational costs in the U.S.
- Fiscal 2024 revenues increased by 1.7%, reaching $4.545 billion.
- The company is optimistic about fiscal year 2025, citing improvements in dairy commodities.
- Major capital projects are expected to deliver greater benefits through FY25 and accelerate in FY26.
