Saputo Australia 20140113

Cheesemaker Saputo has had a year of growth with revenues up by 20 per cent. (Ryan Remiorz/Canadian Press)

Montreal-based dairy operater Saputo Inc. came under fire Tuesday from an animal rights activist who said it hasn't done enough to prevent animal cruelty on farms that produce its milk.

Krista Osborne, executive director of Mercy For Animals, which shot undercover videos revealing cows being kicked, punched and beaten with pipes at a dairy operation in Chilliwack, B.C., said all such farms should be under surveillance.

"There is no concrete evidence of any changes made whatsoever and quite frankly Lino Saputo would have no knowledge of what occurred in the Chilliwack cattle sale organization if it wasn't for our undercover investigation," she said.

CEO Lino Saputo Jr. defended the company at the Saputo shareholder meeting saying it took a legal risk in cutting off milk from Chilliwack Cattle Sales because it is required by law to purchase milk from provincial marketing boards and is only permitted to reject milk for safety reasons.

Saputo said the company is pressing for change, including adoption of industry codes of practice and regular farm inspections.

"We will not let this item go until there is some change in the industry," Saputo said following the annual meeting.

"We are not specialists in this field. However we will use our power and our clout to get the attention of those people that have the experience in this field to create some reform in the industry."

It also wants legal reform to give supply managed boards the power to refuse milk based on cruelty.

Chilliwack Cattle fired eight employees after the group took the video to authorities. Saputo resumed accepting milk from the operation following independent verification of its practices from inspectors from Wisconsin and Ontario.

Shares hit record

Saputo saw its stock hit an all-time high today after it announced plans for a two-for-one stock split.

It plans to give holders of its stock on Sept. 29 a second common share for each Saputo share they hold after growing its revenue and profits through acquisitions over the past year.

Shares were up 2.0 per cent at the close of trading Tuesday at $68.95. 

The Montreal company, which is Canada's largest dairy producer, also plans to increase its quarterly dividend by three cents to 26 cents per share.

After completing its acquisition of Australia's Warrnambool Cheese and Butter Factory earlier this year, its revenues were up more than 20 per cent to $2.62 billion in the quarter ended June 30.

Net earnings grew 6.3 per cent to $145.3 million, or 73 cents per share, compared to $136.7 million or 69 cents per share in the same quarter a year ago.

In addition to Warrnambool, Saputo also bought the dairy operations of Scotsburn Co-operative.

It has faced higher prices in the Canadian market, but a weakening Canadian dollar means Saputo’s international returns are stronger.

Prices for cheese and butter are rising in the U.S., contributing to the bottom line, but sales were not as high in the U.S. market.

With files from the Canadian Press