Agropur is not immune to the inflationary wave that is rocking the food industry. In this context, the dairy cooperative, behind the Natrel, Québon and Oka cheese brands, has no choice but to adjust its prices, said its president and CEO, Émile Cordeau.
Mr. Cordeau admits he was surprised at the intensity of the inflationary pressure that was shaking all consumer products since the beginning of the year, in an interview Monday on the sideline of a conference before the Canadian Club of Montreal.
Since January, inflation has been higher than expected. This is really a fact. Every month, we discover new things. We really have a lot of pressure on our input costs. This is going to be a real challenge.
The rise in prices is evident throughout Agropur’s production chain. On the farm, we feel pressure from our producers, which is significant. We are in business, whether it is transportation, packaging, any oil-related, plastics, etc. Working is also a challenge. To attract labor, that could mean – higher – wages, sometimes.
The price of milk, an important input for Agropur, rose 8.4% in February, under an annual review ordered in October by the Canadian Dairy Commission (CLC). This is a process provided by the supply management system.
” It directly affects us. Like, I don’t, our biggest input is milk. When the price of milk rises, we cannot absorb it, so we can do nothing but sell it in the market. Our operation as a whole also has significant inflationary pressure. We have no choice but to pass a portion on to buyers. “
Dairy producers want the CDC to provide a second annual adjustment because of the exceptional inflationary context. Mr. Cordeau declined to comment on whether the increase before February was favorable or not, but he acknowledged that this was a possible scenario.
Better financial position
In repaying its debt, Agropur is in a better financial position than when Mr. Cordeau took over the cooperative’s rent in October 2019. The debt dropped by $ 1.1 billion. or 45%, to reach $ 1.3 billion by the end of 2021.
The ratio of total debt to earnings before interest, taxes, depreciation and amortization (EBITDA) became 3.3 times from 6.3 times.
We set ourselves a target of between 2 and 3 times the EBITDAso we are close to our target.
The good news is that we have refinanced all of our debt. We got a “deal” that was very competitive in the market. Our debt is roughly divided 50/50 between fixed and variable. We have a part that is not exposed to changes and for another, it is a volatility in the market in which we have to survive.added Mr. Cordeau.
headquarters
Negotiations about a potential sale of the headquarters, located in Longueuil, remain ongoing, Mr. Cordeau said. The first plan was to lease 50% of the area and occupy half of the building, which cost the City of Longueuil $ 94 million. About 15% of the area has seen draws, the manager said Monday.
At the beginning of the year, one of the guests made an unsolicited purchase offer. The process takes its course. No decision yet. Still evaluating, I have no news.
Source: Radio-Canada
