Saputo is looking at further acquisitions in Australia and New Zealand, according to chief executive officer Lino Saputo Jnr.
Mr Saputo, speaking on Tuesday after the release of Saputo’s first-quarter results, said the company was also looking at opportunities in other parts of the world, including in the United States, Argentina and Europe.
Mr Saputo said the company was committed to growing its milk intake in Australia in the wake of its acquisition of Murray Goulburn in May.
“We’ve got to bring more milk into the platform,” he said.
“Right now if I look at the WCB (Warrnambool Cheese and Butter) platform, we are running close to 97-98 per cent capacity utilisation.
“On the MG side, we are running somewhere around 58 per cent capacity utilisation.
“So one of the easiest ways to drive synergies and drive profitability is getting more milk through the plants, but, of course, it’s got to go into profitable products that we can sell either domestically or internationally.”
Mr Saputo said he expected it would take up to three years to fully merge the operations of MG and WCB and to realise the synergies.
“The integration of both the WCB and MG businesses is going extremely well and colleagues are starting to operate under a combined Saputo Dairy Australia umbrella,” he said.
He said the company at a corporate level was operating as one entity and since May 1, there had already been a head-count reduction.
Further synergies would include in milk collection and transport and moving some production from WCB to MG or vice versa.
Customers in emerging markets were looking for more product from Saputo Australia.
“So as we ramp up the capability of processing in MG, we will have a home for the finished goods,” he said.
Mr Saputo was bullish about the international market.
“Prices on the international market don’t seem to be declining as rapidly as they did in the past,” he said.
“In fact, if I look at the world dairy production numbers, coming out of New Zealand and coming out of Europe, there are some very encouraging signs there.”
NZ production growth did not look like exceeding 1-1.5 per cent per year, due to regulatory and climatic issues.
“That bodes really well for the international market, and with New Zealand accounting for 54 per cent of international trade, already there is a better balance between supply and demand, just by virtue of what is coming off the farm.”
Article sourced from http://adf.farmonline.com.au/