Maple Leaf Foods Q1 earnings up; sales down

Maple Leaf Foods Inc. has announced its financial results for the first quarter ended March 31, 2010.

 

Sales for the first quarter declined 7% to US$1.19 million from US$1.27 million last year, mostly due to the impact of the strengthening of the Canadian dollar on fresh pork sales.

 

Adjusted Operating Earnings increased 7% to US$33.9 million compared to US$31.6 million last year, due to better performance in the protein operations. Net earnings increased to US$8.8 million or US$0.06 per share in the first quarter of 2010 compared to net earnings of US$2.9 million or US$0.02 per share last year.

 

Meanwhile, Meat Products Group sales for the first quarter declined to US$768.2 million from US$822.2 million last year, as the stronger Canadian dollar reduced the sales values of fresh pork. Additionally, sales volumes were lower in prepared meats due to the exit of a non-core business and normalised levels of promotional activity compared to the first quarter last year.

 

Adjusted Operating Earnings in the Meat Products Group increased to US$14.2 million compared to US$11.4 million last year, largely due to improved markets and efficiencies in the fresh poultry operations.

 

Performance in the prepared meats business improved over last year as a result of better pricing and mix and cost reduction initiatives, partly offset by lower volumes.

 

However, first quarter margins were impacted by a sharp increase in raw material prices that occurred late in the fourth quarter of 2009. Management is implementing staged price adjustments over the next two quarters across its prepared meats portfolio to offset higher input costs. Earnings from primary pork processing operations declined due to a stronger Canadian dollar and weaker export markets that more than offset the benefit of improved North American industry market conditions.

 

Lastly, Agribusiness Group sales declined from US$44.6 million last year to US$41.8 million mostly due to lower sales of recycled by-products.

 

Adjusted Operating Earnings increased to US$6.5 million compared to US$2.1 million in the prior year. Losses in hog production operations were reduced due to lower feed costs and stronger hog market prices.

 

However, this improvement was impacted by the strengthening of the Canadian dollar and short-term hedging programs. Included in first quarter earnings is US$3.0 million (2009: US$0.1 million) in government support to compensate hog producers for losses in prior years. Earnings from by-product recycling declined slightly compared to last year due to increased raw material costs.