Cheese maker Saputo struggled in the second quarter that dragged down profits as a perfect storm formed from disruptions related to COVID-19, labor shortages and the supply chain weighed on his results.
“It is clear that we are still facing considerable headwinds,” the chairman of the board and CEO of Montreal dairy processor, Lino Saputo Jr., observed Thursday in a conference call with analysts Thursday.
“We continue to feel the lingering disruptions of the pandemic and with economies reopening, we are particularly faced with access to labor, supply chain challenges and inflationary pressures. ”
The cheese and other dairy producer made a profit of 98 million, or 24 cents per share, for the quarter ended Sept. 30, down 42.7% from its profit of 171 million, or 42 cents per share. share, from the same period a year earlier.
The findings highlight challenges with supply chain bottlenecks and workforce issues, which the company says has put pressure on its ability to meet demand.
Saputo also indicated that it could be at least another 12 months before labor availability, particularly in the United States, normalizes.
In the meantime, Saputo has instituted price hikes to adjust for inflation, but these higher prices fail to keep up with rising costs.
“Pricing initiatives undertaken during the quarter lagged behind rising costs, which continue to rise,” the company’s chief financial officer, Maxime Therrien, told analysts.
“The deployment of our pricing initiative will continue to be implemented […] which should further offset some of the cost pressure we are experiencing. ”
The company clarified that higher costs, including compensation for overtime, transportation, fuel and packaging, are expected to remain at high levels.
Adjusted profit, which excludes one-time items, fell 37% to $ 116 million, or 28 cents per share, from $ 184 million, or 45 cents per share, in the second quarter of 2020.
Revenue was flat at $ 3.7 billion as higher foodservice sales were offset by lower retail sales.