07/31/2012 10:31 EDT | Updated 09/30/2012 05:12 EDT

Cheese giant Saputo's net earnings for Q1 down slightly on lower cheese prices

MONTREAL - Canadian cheese and dairy giant Saputo Inc. (TSX:SAP) saw its profits fall four per cent in the quarter ended June 30 on lower cheese prices in the U.S. and an inventory write down in its Argentine division.

The company reported a profit of $121.8 million for the quarter, or 60 cents per diluted share, compared with $126.6 million or 61 cents per diluted share in the same period last year.

Revenue came in at $1.7 billion in the quarter, up nearly four per cent from $1.64 billion year over year.

Saputo was expected to report 67 cents per diluted share on $1.64 billion of revenues during the quarter, according to estimates compiled by Thomson Reuters.

The Montreal-based company says the weak U.S. market cut its earnings before interest, taxes, depreciation and amoritization by approximately $14 million.

Saputo also took a $2.5-million charge in its Argentine division to reflect a drop in selling prices in the export market at the end of the quarter.

Despite the drop in its quarterly results, Saputo said Tuesday that it will increase its quarterly dividend to 21 cents per share, up from 19 cents.

Based on the company's share price, the stock will carry an annual yield of about 1.9 per cent based on the increased dividend.

The quarter was the first since Saputo elevated long-time company executive Dino Dello Sbarba to president and chief operating officer.

Lino Saputo Jr. remains CEO and vice-chairman.

The Montreal-based company announced in June that it would buy back and cancel about one million of its common shares through private agreements with an arms-length seller.

Saputo is the world's 12th largest dairy processor and Canada's largest with more than 10,200 employees.

It produces, markets and distributes cheese, milk, yogurt and dairy products at 47 plants in Canada, the United States, Europe and Argentina. It is also Canada's largest snack cake producer.

Saputo shares were down 95 cents at $43.12 in trading on the Toronto Stock Exchange.