Saputo may sell King Island factory

Saputo Dairy Australia is looking at the long-term future of one of its processing facilities, while pouring money into others. Photo by Jamie Salter

Saputo Dairy Australia says it is considering selling its King Island Dairy facility while committing an additional $27 million towards improvement projects across its sites in Victoria and Tasmania.

SDA says it intends to keep its King Island Dairy operations running at regular capacity while it assesses possible future scenarios to maximise value for the King Island Dairy business.

With the assistance of its advisers, MA Moelis Australia, the review will consider a range of strategic, commercial and financial alternatives, including a potential sale to a third party so the facility can continue to make its award-winning products for the long term.

About 63 employees that work at the facility have been informed of the strategic review and site management will work closely with them throughout the process.

Alongside this strategic review, SDA will continue a series of investments across its Victorian and Tasmanian sites.

To further enhance the company’s network efficiency and capability, and reduce its operating costs, SDA says it is investing an additional $27 million in new capital projects, including $8 million to improve its climate, water and waste performance.

“In making these investments and strategic decisions, we remain focused on maximising our return for every litre of milk to further enhance SDA’s position as a high-quality, low-cost processor in Australia,” Saputo Inc president and chief operating officer (International and Europe) Leanne Cutts said.

“As King Island Dairy’s historic roots are deeply embedded in the region, we hope to find a buyer for the facility to ensure the continued success of its renowned specialty cheese products,” she said.

“We recognise the potential impact any decision may have on the King Island community, especially our employees and dairy farmers, and we are committed to thoughtfully considering all possible scenarios before any decisions are made.

“This announcement builds on SDA’s previously confirmed consolidation initiatives that aim to align our manufacturing footprint with our current and future expected milk intake, which is already delivering higher utilisation through our facilities, while increasing efficiency and reducing operating costs.

“Once completed, this strategic review of King Island Dairy will conclude our current challenge to strengthen our competitiveness by proactively adapting our manufacturing footprint to align with the changed dairy industry landscape and deliver on our vision for long-term success in Australia.”