CEO profile: Lino Saputo

Canada’s top 500 CEOs

CEO #63: Lino Saputo

Financial Post Magazine November 04, 2008

It’s rare to find Lino Saputo Jr. in his office. The CEO of Saputo Ltd., one of the country’s biggest producers and distributors of milk, cheese and yogourt, prefers to spend his time visiting plants and chatting with staff to maintain the business’s “everyone is family” philosophy. The rest of his time is spent following the other Saputo creed: growth through acquisition.

Saputo is facing a difficult market for dairy producers: U.S. cheese prices are volatile and an ongoing exodus of European dairy farmers has sent milk prices skyrocketing, adding to pressure from the high loonie. Yet Saputo has kept its balance sheet debt-free and has seen double-digit growth in revenue ($5.1 billion, up 26% from 2007) and dividends ($0.56 per share annually, up 17%).

Analysts attribute these results to good management and a successful acquisitions strategy. “Saputo remains among the best run companies in [the consumer goods] sector,” TD Securities analysts Michael Van Aelst and Evan Frantzeskos wrote in a recent note. They predict the company will be in a strong position to make acquisitions next year, which is exactly what Saputo has in mind. “We usually have two or three acquisition targets on the table,” he says. In its past fiscal year, Saputo bought Alto Dairy and the Land O’Lakes industrial unit to double its U.S. presence.

In Canada, however, things are more challenging. Milk supply and price are controlled by a supply-management system, and the government has introduced new regulations requiring cheese producers to boost raw milk content in cheese. Saputo has legally challenged the new rules, saying they unfairly protect dairy farmers, and will force cheese makers to raise prices. “The growth opportunities in the U.S. are much greater than in our own backyard,” he says.

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