October 27, 2006

Maple Leaf Foods incurs US$22.3 million loss for Q3

Canada's Maple Leaf Foods Inc has incurred a third-quarter loss of US$22.3 million, from a year-ago profit due to major restructuring costs and the stronger Canadian dollar.

In a release, CEO Michael McCain said the performance in the third quarter does not reflect the potential of the company.

The Toronto-based company, which introduced a major overhaul of its protein value division, said it would improve profitability by reducing exposure to currency and commodity markets while focusing on its value-added meats and meals business.

The restructuring and other expenses had cost the company US$19.7 million before income taxes. The charges mainly involved the writedown of certain investments, consolidating costs and divestments of non-core businesses.

It also recorded a non-recurring tax expense of US$21.2 million to write down future tax assets for its US bakery business.

Aside from those charges, earnings from operations fell 35 percent to US$46.3 million from US$71.6 million.

Sales for the quarter ended Sept. 30 fell five percent to US$1.5 billion, in part due to lower prices for export products as the Canadian dollar climbed.

Maple Leaf has also cancelled plans for a pork processing plant in Saskatoon and would wind down operations at an existing plant over the next three years. It also announced plans to back out of the international fresh pork market.