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Highlights
- Saputo Inc (TSX:SAP) has become the talk of the town amid speculation that the Canadian dairy company is set to buy New Zealand-based infant formula and fresh milk firm A2 Milk Company Ltd.
- Stocks of both A2 Milk and Saputo noted some movement in the wake of the merger speculations.
- However, neither Saputo nor A2 Milk have spoken about the acquisition.
Saputo Inc (TSX:SAP) has become the talk of the town amid speculation that the Canadian dairy company is set to buy New Zealand-based infant formula and fresh milk firm A2 Milk Company Ltd.
While stocks of both A2 Milk and Saputo noted some movement in the wake of the merger speculations, neither of the two companies have released a statement about any acquisition plans yet.
Let us talk more about Saputo and its overall performance.
Saputo Inc (TSX:SAP) Q2 FY2022 financial results
The C$ 11-billion market cap milk company, on January 20, said that it is the date to release its financial results for the third quarter of fiscal 2022 on February 10.
The milk and dairy products company, which presently has a price-to-earnings (P/E) ratio of 23.8, recorded a revenue of C$ 3.67 billion in Q2 FY2022, as compared to that of C$ 3.7 billion in the same period a year ago.
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Saputo, on the other hand, saw its adjusted EBITDA decline to C$ 283 million in the latest quarter, as compared to that of C$ 370 million in Q2 FY2022, mainly due to high input costs (including freight and logistical costs) in North America.
Image source: ©2022 Kalkine Media®
Data source: Saputo Inc
The supply chain disruptions caused container shortages and port inefficiencies, which led to lower export volumes and impacted the international sector.
On the other hand, the acquisition of Bute Island and Wensleydale Dairy Products have contributed to its European business.
Saputo Inc stock performance
Stocks of Saputo Inc climbed nearly two per cent to close at a value of C$ 27.45 apiece on Monday, January 24, following the acquisition rumours.
The dairy stock, however, has dropped by over 23 per cent in the last one year.
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Bottomline
Saputo Inc’s acquisition strategy in Europe is said to have turned out profitable so far. In addition, the Canadian dairy company is focused on its SKU rationalization projects to enhance its productivity as well as strengthen its core business.
Saputo also remains focused on securing new co-packing business throughout North America to produce dairy alternative beverages.
While the speculation of it acquiring A2 Milk is yet to be confirmed, it could come as a boost for its operations as well as its stock market performance.
