September 14, 2006

Maple Leaf restructures hog business as stronger currency eats into profits

Hit by low margins in its fresh pork business, Canada's Maple Leaf Foods is doing some serious soul-searching, looking to see how it can restructure its business and consolidate its hog slaughter and processing operations.

This restructuring could mean that an announced US$110 million hog slaughter plant in Saskatchewan may be scrapped. Maple Leaf may add a permanent second production shift to its huge Brandon, Alberta, instead of pressing on with plans for the new plant, according to local reports. The company refused to comment. 

Michael McCain, president and chief executive, said the company is now assessing its options now that the strengthening Canadian dollar has forced the company to cut export prices so as to keep sales volumes.

The strong Canadian dollar has had a big impact on profits. Earnings in the second quarter ended July 28 plummeted to C$21.2 million (US$19 million) from C$33.2 million (US$29.7 million) a year ago.