Editorial by our CEO, Émile Cordeau
Dear Members and Colleagues,
Welcome to this very first edition of Agropur's newsletter! From now on, every month you will be able to follow the latest news from our organization from a different angle.
On February 12, we presented our 2019 financial highlights at our Annual General Meeting. Agropur continued its growth last year with sales of $7.3 billion, a 10.2% increase from 2018. Sales were up in both Canada and the US.
EBITDA was also up, climbing by 3.3%. But despite the increase, the Cooperative’s profitability is not yet up to its potential. As you know, our net earnings were down to $47 million in 2019.
There were several factors in the earnings decline, including higher financial expenses, higher depreciation expenses and start-up costs for major capital projects. In addition, there is intense and persistent competition in the industry. Selling prices for dairy products are stagnating on the Canadian market. We are observing overcapacity in some product segments. It must also be realized that dairy prices have been relatively stable in Canada. The consumer price index for dairy products has increased by only 1.6% since 2014 while food prices in general have risen 11.2%. The Canada-EU trade agreement is also directly affecting our fine cheese sales, our selling prices and our margins.
Over the last decade we have picked up a total of 14 businesses through mergers and acquisitions, adding close to $3 billion to our sales. This rapid growth has made Agropur a leading player but it has also brought increased complexity, especially in Canada.
There is no doubt that we now have all the tools we need to reap the benefits of our growth of recent years. We need to optimize our manufacturing and distribution network and maximize our product line to realize efficiencies.
We have the right products, strong brands that are appreciated by Canadians, a solid reputation, engaged employees, and members who are committed to the Cooperative’s sustainability. We have everything we need to perform at full potential.
So fiscal 2020 promises to be a year packed with challenge and opportunity. In the coming months, we will continue to implement our development plan for Canada and work aggressively to improve our bottom line. Our focus will once again be on realizing the benefits of our network’s significant growth of recent years. Our Lake Norden plant expansion will also contribute to earnings growth in the US.
I recently had the pleasure of rounding out my team with the appointment of Stéphane Tremblay as Senior Vice-President and Chief Financial Officer. With his years of experience with the Cooperative, Stéphane is well equipped to meet all the challenges that await him.