NEWSROOM

Press release

For immediate release

 Net earnings at $57.8 million, down 29.5% for the quarter

Net earnings at $209.8 million, down 1.5% since the beginning of fiscal 2009

(Montréal, February 4, 2009) – Saputo Inc. released today its financial results for the third quarter of fiscal 2009, which ended December 31, 2008.

-Net earnings for the quarter ended December 31, 2008 totalled $57.8 million, a decrease of $24.2 million or 29.5% compared to $82.0 million for the same quarter last fiscal year. Included in the results of the current quarter is an inventory write-down of $12.9 million in relation with a strong decrease in the block market1 per pound of cheese at the end of this quarter and depressed international selling prices. Also included are plant related closure costs for our Hinesburg, Vermont manufacturing facility of $7.4 million, of which $6 million are non-cash costs. Results for the same quarter last fiscal year included a one-time tax reduction to adjust future tax balances of approximately $6.5 million due to a reduction in Canadian federal tax rates. Excluding these adjustments, net earnings would have been $78.1 million, an increase of $2.6 million or 3.4% in comparison to the $75.5 million for the same quarter last fiscal year.

-Consolidated revenues for the quarter ended December 31, 2008 amounted to $1.517 billion, an increase of $240.0 million or 18.8% in comparison to the $1.277 billion for the corresponding quarter last fiscal year. Revenues from our USA Dairy Products Sector increased by approximately $141 million due mainly to the contribution of the Alto Dairy Cooperative’s activities in the United States (US), acquired on April 1, 2008 (Alto Acquisition), completed at the beginning of fiscal 2009 combined with the weakening of the Canadian dollar. This increase was partially offset by a lower average block market per pound of cheese of US$1.79 compared to US$1.99 for the same quarter last fiscal year, and a less favourable by-product market. Revenues from our Canada, Europe and Argentine (CEA) Dairy Products Sector increased by approximately $99 million in comparison to the same quarter last fiscal year. Higher selling prices in Canada and in Argentina’s domestic market in accordance with the increase in the cost of milk as raw material, increased sales volume from our Dairy Products Division (Argentina), and the Neilson Dairy Acquisition2 are the main factors explaining the revenue increase. These positive factors were slightly offset by less favourable by-products market conditions. Revenues from our Grocery Products Sector decreased by approximately $0.3 million in comparison to the same quarter last fiscal year.

-Consolidated EBITDA3 amounted to $125.7 million, a decrease of $11.3 million or 8.2% in comparison to $137.0 million for the same quarter last fiscal year. Inventory write-down amounted to $18.5 million during this quarter in relation to our US, Argentinean and European operations. The EBITDA of our CEA Dairy Products Sector decreased by approximately $8.9 million. The EBITDA of our USA Dairy Products Sector decreased by approximately $1.4 million in comparison to the same quarter last fiscal year and the EBITDA of our Grocery Products Sector decreased by approximately $1 million in comparison to the same quarter last fiscal year.

-EBITDA for the CEA Dairy Products Sector amounted to $86.7 million, a decline of $8.9 million or 9.3% compared to the $95.6 million of the corresponding quarter last fiscal year. This decrease was due to less favourable by-product market conditions in our Canadian operations which negatively impacted EBITDA by approximately $6 million. It was also due to lower profitability in international sales resulting from the general decrease of sales prices on the international market and a $7.4 million write-down of inventory in our Argentinean and European operations. These offset the inclusion of one-month’s results from the Neilson Dairy Acquisition.

-EBITDA for the USA Dairy Products Sector totalled $35.7 million, a decrease of $1.4 million in comparison to the $37.1 million for the same quarter last fiscal year. The decrease is mainly due to market factors which negatively impacted EBITDA by approximately $18 million. These market factors are the decrease of the average block market per pound of cheese and the decrease of the selling prices on the whey market as well as a $11.1 million write-down of inventory reflecting a strong decrease in the block market at the end of this quarter. They were partially offset by the Alto Acquisition, initiatives undertaken in the prior and current fiscal years with regards to improved operational efficiencies and increased selling prices, as well as the benefits derived from changes to the United States Department of Agriculture Class III product-price formula. These factors combined positively affected EBITDA by approximately $12 million in comparison to the same quarter last fiscal year. The weakening of the Canadian dollar increased EBITDA by approximately $7 million.

-EBITDA for the Grocery Products Sector amounted to $3.2 million, a $1.0 million decrease or 23.8% compared to the same quarter last fiscal year. In the quarter, the Division incurred additional costs in an effort to support its brands, along with a decrease in sales volume and increased operating costs related to higher ingredient, packaging, labour and energy costs totalling approximately $1.6 million compared to the same quarter last fiscal year.

-Cash generated by operating activities amounted to $94.9 million, compared to $94.1 million for the corresponding quarter last fiscal year.

-In the third quarter, the Company issued shares for a cash consideration of $1.3 million, as part of the stock option plan and paid $29.0 million in dividends.

For more information on the results of the third quarter of fiscal 2009, please read the attached interim report for the quarter ended December 31, 2008, which forms an integral part of this press release.

Dividends

The Board of Directors declared a quarterly dividend of $0.14 per share payable on March 20, 2009 to common shareholders of record on March 9, 2009.

Appointments in Senior Management

The Company announces changes in its senior management team effective February 9, 2009. Mr. Claude Pinard, currently President and Chief Operating Officer of the Bakery Division, has been appointed as Executive Vice President, Corporate Communications and Social Responsibility. The position of President and Chief Operating Officer of the Bakery Division will be assumed by Mr. Lionel Ettedgui. Mr. Ettedgui was recently President and General Manager of a food company and has extensive experience in manufacturing operations and sales in the food industry.

Conference Call

A conference call to discuss the third quarter results of fiscal 2009 will be held on Wednesday, February 4, 2009, at 3 PM, Eastern time. To participate in the conference call, dial 1.888.241.0326, ID number 81176861. To ensure your participation, please dial in approximately five minutes before the call.

To listen to this call on the web, please enter http://events.onlinebroadcasting.com/saputo/020409/index.php in your web browser.

For those unable to participate, a replay will be available until midnight, Eastern time, Wednesday, February 11, 2009. To access the replay, dial 1.888.567.0782, ID number 81176861. A replay of the conference call will also be available on the Company’s web site at www.saputo.com.

About Saputo

Together, over the years, we have aspired to grow, exploring new opportunities while staying true to our culture. Our progress is owed to the continued dedication of our 9,500 employees, who, across 5 countries, team up every day to go further. They craft, market and distribute a wide range of high-quality products, including cheese, milk, yogurt, dairy ingredients and snack-cakes. Saputo is the 15th largest dairy processor in the world, the largest in Canada, the third largest in Argentina, among the top three cheese producers in the United States, and the largest snack-cake manufacturer in Canada. Consumers and customers in over 40 countries appreciate our products distributed under our well-known brands such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, Danscorella, De Lucia, Dragone, DuVillage 1860, Frigo, Kingsey, La Paulina, Neilson, Nutrilait, Ricrem, Stella, Treasure Cave, HOP&GO!, Rondeau and Vachon. Saputo Inc. is a public company whose shares are traded on the Toronto Stock Exchange under the symbol SAP.

[1] "Average block market" is the average daily price of a 40 pound block of Cheddar traded on the Chicago Mercantile Exchange (CME), used as the base price for the cheese.

[2] The acquired activities of Neilson Dairy, the dairy division of Weston Foods (Canada) Inc. completed on December 1, 2008

[3] Measurement of results not in accordance with generally accepted accounting principles

The Company assesses its financial performance based on its EBITDA, this being earnings before interest, income taxes, depreciation, amortization and impairment. EBITDA is not a measurement of performance as defined by generally accepted accounting principles in Canada, and consequently may not be comparable to similar measurements presented by other companies.

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 Report

Information

Karine Vachon

Senior Advisor, External Communications

514.328.3377

Pour plus d'information:
Camillo Lisio
vice-président exécutif
(514) 328-3314