Dairy giant Saputo Inc. struggled in its second quarter with sinking profit despite stable revenue as a perfect storm of COVID-19 disruptions, labour shortages and supply chain turmoil weighed on the company's bottom line.
"It's clear we're still facing considerable headwinds," Lino Saputo Jr., board chair and CEO of the Montreal-based dairy processor, said during a conference call with analysts on Thursday.
"We continue to feel the lingering disruptions of the pandemic and with economies reopening, we're particularly challenged with access to labour, supply chain difficulties and inflationary pressures."
Saputo earned $98 million or 24 cents per diluted share for the three months ended Sept. 30, plummeting 42.7% from $171 million or 42 cents per share a year earlier.
The results underscore the challenges of operating with supply chain bottlenecks and labour issues, which the company said had put pressure on its ability to meet demand.
The dairy processor also indicated it could take at least another 12 months before the availability of labour, particularly in the United States, normalizes.
Meanwhile, Saputo has ushered in price increases to cope with inflation, yet those higher prices are failing to keep up with rising costs.
"Pricing initiatives undertaken during the quarter lagged rising costs, which continue to increase, Saputo chief financial officer Maxime Therrien told analysts.
"The rollout of our pricing initiative will continue to be implemented ... which should further offset some of the cost pressure we are experiencing."
The company said higher costs, including overtime wages, transportation, fuel, consumables and packaging, are expected to remain at elevated levels.
Meanwhile, Saputo's adjusted profits dropped 37 per cent to $116 million, from $184 million in the second quarter of 2020.
That equalled to 28 cents per share, 17 cents below last year's second quarter.
Revenues remained stable at $3.7 billion as an increase in food service sales was offset by lower grocery sales.