February 29, 2012

 

 

A 70% drop in fourth quarter profit has been reported by Maple Leaf Foods Inc. Tuesday (Feb 28), as higher costs impacted meat and poultry margins, while operating costs increased in its bakery business.

 

For the period ended December 31, Maple Leaf earned US$9.2-million (US$0.06 a share), compared with US$30.6-million (US$0.21) a year ago. This included US$32.2-million (US$0.17 a share) in costs related to restructuring activities, compared with US$19.7-million (US$0.11) in 2010.

 

On the year, net profit came in at US$87.3-million (US$0.59), compared with US$35.6-million (US$0.22) in 2010. This includes US$79.8-million (US$0.41) of restructuring costs, compared with US$81.1-million a year ago.

 

Adjusted for restructuring costs, earnings in the quarter dropped to US$57.4-million (US$0.21), compared with US$70-million (US$0.27) a year ago. Analysts surveyed by Reuters had forecasted adjusted earnings of US$0.26 a share.

 

Sales actually rose 3% to US$1.24-billion in the fourth quarter compared with US$1.21-billion a year ago, largely on higher selling prices in its meat products group, offset to some degree by lower volumes.

 

For the full year, revenues decreased 2% to US$4.9-billion, from US$4.97-billion a year ago.

 

"We experienced a challenging fourth quarter as a result of unseasonably strong raw material costs which impacted continued margin growth in prepared meats. We also experienced short term higher operating costs in our bakery business," Michael McCain, chief executive with Maple Leaf,said in a release. "These factors, combined with lower pork and poultry processing margins from year ago highs, contributed to lower relative performance in the fourth quarter."

 

The company is raising its prices to deal with these issues, he said.

 

"We are now actively passing through pricing to help mitigate these challenges and we remain committed to executing our value creation initiatives," McCain said.

 

Meanwhile, Canada Bread Co. Ltd., Maple Leaf's 90%-owned bakery products operation, posted a 36% drop in earnings in its fourth quarter, also dinged by higher input costs. For the quarter ended December 31, Canada Bread earned US$7.8-million (US$0.31), compared with US$13.8-million (US$0.54) in 2010.

 

Full-year earnings came in at US$51.9-million (US$2.04), compared with US$62.1-million (US$2.44) a year ago. Sales, both for the quarter and the full year, were up, however. In the quarter, Canada Bread posted US$400.3-million in revenues, compared with US$393.1-million a year ago. On the year, Canada Bread posted US$1.6-billion in sales, compared with US$1.59-billion a year ago.

 

"We maintained consistent earnings for the year despite a surge in wheat prices," Richard Lan, chief executive with Canada Bread, said in the release. "Our fourth quarter results declined due to incremental costs resulting from changes in our manufacturing network, and continued exposure to high input costs in our frozen bakery business."