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Introduction & Market Context
Saputo Inc (TSX:SAP) presented its first quarter fiscal 2026 results on August 8, 2025, highlighting record first-quarter adjusted EBITDA performance and improved metrics across all business segments. The Canadian dairy giant reported a 0.5% increase in revenue to $4.631 billion, while adjusted EBITDA jumped 11.2% to $426 million compared to the same period last year.
The company’s stock has shown positive momentum over the past year, with shares trading at $33.66 as of October 2, 2025, up from $26.51 after the Q1 2025 earnings announcement, reflecting investor confidence in Saputo’s operational improvements and strategic initiatives.
Quarterly Performance Highlights
Saputo achieved significant improvements in its key financial metrics for Q1 FY2026, with net earnings increasing by 16.2% to $165 million and adjusted net earnings rising 10.2% to $184 million. Basic and diluted earnings per share reached $0.40, representing a 21.2% year-over-year increase, while adjusted EPS grew by 12.8% to $0.44.
As shown in the following consolidated results:
The company attributed this strong performance to several factors, including operational improvements from recent capital investments, disciplined cost optimization measures, higher domestic selling prices that preserved margins, and favorable relations between international cheese and dairy ingredient market prices relative to milk costs. Sales volumes increased with a favorable product mix, though this was partially offset by unfavorable US dairy commodity market conditions.
Cash flow generation was particularly impressive, with net cash from operating activities totaling $317 million, a substantial increase of 66% compared to the same period last year. This robust cash flow enabled Saputo to return capital to shareholders through $123 million in share repurchases and $79 million in dividend payments while also reducing net debt.
Detailed Financial Analysis
All of Saputo’s business segments reported year-over-year growth in adjusted EBITDA during the quarter, with each sector contributing to the company’s overall strong performance.
The Canada Sector showed solid results with revenues of $1.321 billion, up 5.4% from Q1 FY2025, and adjusted EBITDA of $170 million, representing an 11.1% increase. The sector’s adjusted EBITDA margin improved to 12.9%, driven by higher sales volumes from commercial initiatives, favorable product mix, and higher pricing, along with selling, general, and administrative cost efficiencies.
The USA Sector, Saputo’s largest by revenue, generated $2.128 billion in revenues (up 2.1%) and $171 million in adjusted EBITDA (up 5.6%), with an adjusted EBITDA margin of 8.0%. This improvement was attributed to operational enhancements from recent capital investments, disciplined execution on customer fulfillment, proactive cost management, higher sales volumes, and favorable product mix.
The International and Europe Sectors presented a mixed picture. While International Sector revenues declined by 13.8% to $865 million, its adjusted EBITDA increased by 22.2% to $55 million, improving the margin to 6.4%. The Europe Sector showed strong growth with revenues up 20.1% to $317 million and adjusted EBITDA rising 30.4% to $30 million, resulting in a 9.5% margin. Combined, these segments generated $1.182 billion in revenues and $85 million in adjusted EBITDA.
The company’s quarterly financial information by sector provides a comprehensive view of performance trends over multiple periods:
Strategic Initiatives
Saputo’s presentation highlighted several strategic initiatives that contributed to its strong Q1 performance and are expected to drive future growth. The company emphasized ongoing efficiency initiatives stemming from recent capital investments, particularly in the USA Sector, which have led to operational improvements and enhanced productivity.
Cost optimization measures have been implemented across all sectors, resulting in improved efficiencies and more effective resource allocation. These initiatives have contributed to lower selling, general, and administrative costs while supporting margin expansion.
In the International Sector, Saputo is focusing on product mix optimization and cost reductions in Australia to improve performance. The Europe Sector is expected to see continued improvement supported by margin recovery initiatives and a favorable relation between selling prices and input costs.
Forward-Looking Statements
Looking ahead to the remainder of fiscal 2026, Saputo expressed confidence in its long-term outlook and ability to navigate macroeconomic challenges. The company expects organic sales growth, particularly in the USA Sector, though it anticipates continued volatility in US dairy markets driven by milk supply and dairy demand dynamics.
Saputo projects continued strong performance in the Canada Sector and improved results in the Europe Sector. The company expects to benefit from recent improvements in global dairy ingredient market prices and anticipates further contributions from optimization and capacity expansion initiatives, especially in the USA Sector.
Capital expenditures for fiscal 2026 are projected to total approximately $360 million, with a continued focus on improving working capital and generating strong cash flow from operations. Saputo also plans to continue repurchasing shares under its Normal Course Issuer Bid (NCIB) program.
The company noted that the direct impact of trade-related tariffs on its business is expected to be limited, though selling, general, and administrative expenses may be affected by higher labor costs.
Overall, Saputo’s Q1 FY2026 presentation depicted a company successfully executing its strategic initiatives, achieving record first-quarter adjusted EBITDA, and well-positioned for continued growth despite challenging market conditions.
Full presentation:
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