Alberta
Dairy industry woes push Saputo to revise earnings forecast
MONTREAL — Saputo Inc. has pushed back the target date to reach its earnings forecast amid flagging consumer demand for milk products across the globe.
In first-quarter financial results released after markets closed Thursday, the dairy giant said it no longer expects to achieve its annual goal of $2.13 billion in earnings before interest, taxation, depreciation and amortization by March 2025.
“The target of $2.1 billion is still the same,” CEO Lino Saputo told analysts on a conference call Friday. “We are confident in our plan and in our ability to effectively carry out the projects we have set ourselves. That’s not the issue.
“It’s the unpredictability of the market in terms of price and consumer confidence that leads us to push back the deadline,” he said.
The chief executive sought to assure industry watchers that “the most difficult stages” on the operational level are near completion.
RBC Capital Markets analyst Irene Nattel wasn’t surprised by the announcement, and served up reasons for hope.
“Street was already there, (with a) consensus $1.89 billion. Looking ahead, dairy markets have strengthened considerably in the second quarter. The effect of adverse market conditions on profitability was less than anticipated,” she said in a note to investors.
Saputo’s revenues fell 2.8 per cent year over year to $4.2 billion in the quarter ended June 30. Net income totaled $141 million, up from $139 million a year earlier.
Adjusted diluted earnings per share were 36 cents, beating analyst expectations of 34 cents per share, according to financial markets data firm Refinitiv.
This report by The Canadian Press was first published Aug. 11, 2023.
Companies in this story: (TSX:SAP)
The Canadian Press
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Alberta
Alberta government should eliminate corporate welfare to generate benefits for Albertans
From the Fraser Institute
By Spencer Gudewill and Tegan Hill
Last November, Premier Danielle Smith announced that her government will give up to $1.8 billion in subsidies to Dow Chemicals, which plans to expand a petrochemical project northeast of Edmonton. In other words, $1.8 billion in corporate welfare.
And this is just one example of corporate welfare paid for by Albertans.
According to a recent study published by the Fraser Institute, from 2007 to 2021, the latest year of available data, the Alberta government spent $31.0 billion (inflation-adjusted) on subsidies (a.k.a. corporate welfare) to select firms and businesses, purportedly to help Albertans. And this number excludes other forms of government handouts such as loan guarantees, direct investment and regulatory or tax privileges for particular firms and industries. So the total cost of corporate welfare in Alberta is likely much higher.
Why should Albertans care?
First off, there’s little evidence that corporate welfare generates widespread economic growth or jobs. In fact, evidence suggests the contrary—that subsidies result in a net loss to the economy by shifting resources to less productive sectors or locations (what economists call the “substitution effect”) and/or by keeping businesses alive that are otherwise economically unviable (i.e. “zombie companies”). This misallocation of resources leads to a less efficient, less productive and less prosperous Alberta.
And there are other costs to corporate welfare.
For example, between 2007 and 2019 (the latest year of pre-COVID data), every year on average the Alberta government spent 35 cents (out of every dollar of business income tax revenue it collected) on corporate welfare. Given that workers bear the burden of more than half of any business income tax indirectly through lower wages, if the government reduced business income taxes rather than spend money on corporate welfare, workers could benefit.
Moreover, Premier Smith failed in last month’s provincial budget to provide promised personal income tax relief and create a lower tax bracket for incomes below $60,000 to provide $760 in annual savings for Albertans (on average). But in 2019, after adjusting for inflation, the Alberta government spent $2.4 billion on corporate welfare—equivalent to $1,034 per tax filer. Clearly, instead of subsidizing select businesses, the Smith government could have kept its promise to lower personal income taxes.
Finally, there’s the Heritage Fund, which the Alberta government created almost 50 years ago to save a share of the province’s resource wealth for the future.
In her 2024 budget, Premier Smith earmarked $2.0 billion for the Heritage Fund this fiscal year—almost the exact amount spent on corporate welfare each year (on average) between 2007 and 2019. Put another way, the Alberta government could save twice as much in the Heritage Fund in 2024/25 if it ended corporate welfare, which would help Premier Smith keep her promise to build up the Heritage Fund to between $250 billion and $400 billion by 2050.
By eliminating corporate welfare, the Smith government can create fiscal room to reduce personal and business income taxes, or save more in the Heritage Fund. Any of these options will benefit Albertans far more than wasteful billion-dollar subsidies to favoured firms.
Authors:
Alberta
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