(Montreal) The agricultural cooperative is still studying the unsolicited offer received concerning the purchase of its head office for 100 million in the borough of Saint-Hubert in Longueuil.
Posted at 3:50 p.m.
Updated at 6:12 p.m.
The CEO, Émile Cordeau, agreed to answer questions from the media on the sidelines of his speech to the Canadian Club, Monday noon at the Palais des Congrès in Montreal.
The dairy processor, which had put about half the area of its luxurious South Shore headquarters back on the rental market, received an unsolicited purchase offer shortly thereafter. “We are still studying it, it’s a long process that is taking its course,” said Mr. Cordeau.
PHOTO YVES TREMBLAY, LES EYES DU CIEL ARCHIVES
Agropur’s head office
Debt
The dairy cooperative lightened its financial burden last year by buying back preferred shares that belonged to the Caisse de dépôt and the Fonds FTQ, in particular. As a cooperative institution, its means of financing its growth remain limited compared, for example, to its competitor Saputo, listed on the stock exchange. To circumvent this difficulty, Agropur opted to issue preferred shares as an alternative solution. This avenue proved to be so costly that it led to the buyback of these shares using the proceeds from the sale of the Ultima yogurt division.
To finance its future growth, as for its investment of 168 million in Little Chute, Wis., the milk manufacturer Natrel favors bank debt as much as possible, indicated Mr. Cordeau.
Agropur refinanced its debts last year. “We were able to refinance the whole of the work at a more advantageous cost, he rejoiced. The bank debt has a maturity of five years. Junior grades have a timeline with seven years left. About half of the 1.3 billion debt is at variable rates. We are targeting a debt/EBITDA ratio [bénéfice avant intérêt, impôt et amortissement] two to three times, and here we are just over three times. »
US imports to Canada
Agropur, which generates 45% of its sales in the United States, has two faces: a staunch defender of supply management in Canada and an apostle of free trade in the United States. A paradoxical situation to say the least when your owners are Canadian dairy producers who oppose any change to supply management. Consequence: it is not excluded that the American factories of Agropur export to Canada in the future, recognized the boss. “If that happens, said Mr. Cordeau, it would be based on our import quotas available to Agropur. Currently, it is marginal. As import quotas become available, it is not impossible that our American factories will be favored over the rest of the market. It’s entirely plausible. »
Inflation
Agropur is not immune to the inflationary wave that is shaking the food industry. In this context, the dairy cooperative, behind the Natrel, Québon and Oka cheese brands, has no choice but to adjust its prices, said its president and CEO, Émile Cordeau.
The surge in prices is evident throughout Agropur’s production chain. “On the farm, we feel the pressure from our producers, which is significant. We in the business whether it’s transportation, packaging, anything oil related, plastics, etc. Labor is also a challenge. To attract labor, it may mean wages [plus élevés], sometimes. »
The price of milk, an important input for Agropur, rose 8.4% in February, under an annual review decreed in October by the Canadian Dairy Commission (CDC). This is a process provided by the supply management system.
“It affects us directly,” explains Mr. Cordeau. Want it, don’t want it, our biggest input is milk. When there is a rise in the cost of milk, we cannot absorb it, so we have no choice but to pass it on to the market. Our operation as a whole also has significant inflationary pressures. We have no choice but to pass a portion on to consumers. »
Dairy producers would like the CDC to provide for a second annual adjustment due to the exceptional inflationary context. Mr. Cordeau does not want to comment on whether an increase before February would be desirable or not, but he recognizes that it is a possible scenario.
With The Canadian Press