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Saputo – Risk Profile

Industry: Dairy & Soy Food
Current: Company Performance

As per GlobalData's proprietary risk methodology, Saputo's overall risk score is 3.22, signifying medium risk

The country risk pillar has boosted the overall risk profile of the company
Low profitability margins and financial leverage affected the operational and financial risk scores, respectively

Saputo Inc (Saputo) has a good risk profile and is one of the well-performing companies based on our proprietary risk assessment of the food sector in the consumer industry. Due to its leading position in the dairy market, the company's operational risk score fares better than the sector's average. However, the recent decline in revenues is a cause for concern.

About the Company

Saputo produces, markets, and distributes a range of dairy products. The company's product portfolio includes cheese, fluid milk, dairy ingredients, extended shelf-life milk, cultured products, dairy ingredients, and cream products. The company markets products under Alexis de Portneuf, Armstrong, Dairyland, Milk2Go, Bari, Baxter, Cogruet Joyya, Neilson, La Paulina, MolfinO, Saputo, Ricrem, and Stella brands in Argentina, and Cracker Barrel, Mil Lel, Lactoferrin, SunGold, and Warrnambool brand names.

Saputo is one of the leaders in the food industry, with reported revenue of $10.6 billion in 2021, an annual decline of 5.36%. Net income grew 14.71% in 2021 in comparison to that in 2020.

Risk Pillars

Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. Scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.

Saputo's overall risk score is at par with the sector's overall score. Companies like Dali Foods Group Co Ltd, Calbee Inc, and Foshan Haitian Flavoring Food Co., Ltd. are the leaders in the sector.

Country Risk: Saputo has a country risk score of 4.54, given its presence in diverse territories, insulating it from the risk associated with economic and political factors of a specific region. The company derives a majority of its revenue from the United States (47.46%), followed by Canada (26.81%), Europe (5.12%), and other international regions (20.58%).

Industry Risk:

The company's primary exposure is to the food sector. It generates 100% of its revenue from the food sector, characterized by low-profit margins and weak growth projections compared to other sectors, resulting in an average industry risk score of 3.

Operational Risk:

Saputo has an average operational score of 3.08, driven by its scale. The company enjoys a leading position in the dairy market, which helps the company attract and retain a diversified customer base. A substantial market share in various geographies enables the company to venture into new businesses. It offers products under more than 16 brands across geographies. However, the recent decline in revenues due to the COVID-19 pandemic negatively impacted sales volumes in the foodservice market segment, mainly in the US Sector. Further, mid-single-digit profitability margins have negatively impacted the profitability and operational efficiency pillars.

Financial Risk:

Saputo's financial score of 2.85 is less than the industry's average. The company's good liquidity position places Saputo at an advantage, enabling it to capture potential opportunities arising in the market. However, negative financial leverage has affected the leverage sub-pillar.

About our Methodology:

GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData's proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company's risk and returns potential based on its critical operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.

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