FDBusiness.com

Saputo, the Canada-based international dairy group, is to close its cheese manufacturing plant in Heiden in Germany and is also proposing to close its facility in Newcastle Emlyn in Wales. The two plants were acquired in 2006 and 2007 respectively. The German plant supplies Italian specialty cheeses for the retail market segment, whereas the UK facility mainly produces mozzarella for the food service market segment. 

Since acquiring the businesses, Saputo has aimed to penetrate the European market and gain a better understanding of its realities and dynamics. However, Saputo’s European business does not have sufficient critical mass to be profitable and the company does not see short to mid-term opportunities to ensure such profitability. Saputo has therefore decided to concentrate its efforts and resources in its current platforms and other markets.

In all, approximately 140 employees will be affected. If the proposed closure in Newcastle Emlyn, Wales is confirmed, the cost associated with both plant closures is expected to be approximately C$15 million after taxes. If both facilities close, a loss of approximately C$1.5 million in annual earnings before interest, income taxes, depreciation and amortization related to the European business should be avoided.

Saputo is the twelfth largest dairy processor in the world, the largest in Canada, the third largest in Argentina and among the top three cheese producers in the United States. Its products are sold in more than 50 countries globally.