Saputo (SAP) Scotiabank Back to School Conference summary

Consumer trends and market environment

• Consumers are increasingly value-conscious, prioritizing affordability and health, with dairy products meeting both needs across a wide range of offerings.

• Procurement patterns are shifting in both retail and out-of-home channels, requiring adaptability.

• Protein demand is seen as a structural, long-term shift, with utilization expanding into diverse food and medical applications.

• Demand for specialized whey and protein fractions is growing at double-digit rates, outpacing supply and creating ongoing imbalances.

• GLP-1 trends are driving innovation and focus on high-protein, low-calorie products, with evolving consumer segments.

Supply, trade, and global operations

• Cheese manufacturing remains a bottleneck for meeting protein demand, with limited ability to rapidly expand supply.

• Recent tariff changes have minimal impact due to largely independent supply chains, though whey is a notable exception.

• Strategic exits from Argentina and the UK were driven by risk management and shifting market fundamentals, not performance.

• Retained a minority stake in Argentina and shifted focus to U.S. milk supply for growth and exports.

• Australia asset sale was tactical, reflecting partnership dynamics rather than a broader strategic shift.

Capital allocation and growth strategy

• Current priority is organic growth and relevance with customers, with M&A as a purposeful complement rather than a core strategy.

• Investments are focused on technology, capacity, automation, and innovation to maintain low costs and meet evolving consumer needs.

• CapEx for FY 2027–2028 targets capacity expansion in cottage cheese, cultured products, and value-added milks, alongside automation and AI.

• Buyback program increased to 6% of shares, reflecting strong cash generation and limited near-term alternative uses for capital.

• M&A opportunities must be accretive and provide incremental capabilities, with a narrowed focus on existing strong platforms.