Saputo shifts production in US segment

Building on its previously announced optimisation initiatives, Saputo is planning additional capital investments and consolidation initiatives intended to further streamline and enhance its manufacturing footprint in its US sector.

This includes construction of a new cut-and-wrap facility in Franklin, Wisconsin, creating 600 jobs, the expansion of string cheese operations on the West Coast of the US, along with permanent closure of its Big Stone, South Dakota, Green Bay, Wisconsin, and South Gate, California, facilities.

For the cut-and-wrap site, construction is underway on a greenfield facility in Franklin, Wisconsin, to consolidate and modernise the company’s activities for this process. The plant will become the centre of Saputo’s expanded cut-and-wrap capabilities in the Midwest of the US and is expected to result in the creation of 600 jobs. This new facility represents an investment of CDN$240 million (€164.8m) and is slated to be operating at full capacity by the third quarter of fiscal 2025. Once operational, Saputo anticipates transferring existing packaging operations from other manufacturing sites to the new facility in Franklin. Consequently, the company intends to permanently close its Big Stone, South Dakota, and Green Bay, Wisconsin, facilities in the third quarter of fiscal 2024, and the third quarter of fiscal 2025, respectively.

After ceasing cut-and-wrap activities at its Bardsley Street, Tulare, California, facility, as announced in fiscal 2022, the company now intends to invest CDN$75 million (€65.2m) to convert this location into a string cheese packaging facility. The investment will help support Saputo’s growth ambitions and sustain its leadership position in the string cheese product category, it says. The facility is slated to be operating at full capacity by the third quarter of fiscal 2025. As a result of this optimisation initiative, Saputo intends to permanently close its South Gate, California, facility in the fourth quarter of fiscal 2025, and transfer existing operations from this facility to the Bardsley Street site.

“Continuing to lay the groundwork for future growth in the US, these initiatives aim to solidify our ability to meet current and future customer demand and further improve our cost structure,” says Lino A. Saputo, chair of the board, president and CEO. “Strategic investments, a streamlined footprint and optimised facilities will set the stage for notable improvements in our operational performance as we consolidate activities into world-class facilities. Also designed to increase production capabilities in some of our higher-margin value-added product categories, these initiatives will fuel our aspirations to further enhance our value proposition as a high-quality, low-cost processor in the US.”

These capital investments are expected to yield financial benefits beginning in the fourth quarter of fiscal 2024 and contribute to their full potential of approximately CDN$74 million (CDN$55m, or €37.7m after taxes) annually by the end of fiscal 2027. Costs related to the capital investments and consolidation initiatives outlined above will be approximately CDN$23 million (€15.,8m) after taxes, which include a non-cash fixed assets write-down of approximately CDN$13 million (€8.9m) after taxes. These costs will start to be recorded in the fourth quarter of fiscal 2023. Approximately 720 employees will be impacted by the above-mentioned consolidation initiatives.

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