November 1, 2012
"Our third quarter marked a return to operating profit growth in 2012 as we continue to enhance performance in our base business and execute our value creation strategies," said Michael H. McCain, President and CEO. "We are achieving earnings growth in our consumer facing prepared meats and bakery businesses, and managing higher input costs through responsible pricing. While the challenges of consumer bread demand and pork market conditions continue, we are seeing signs of improvement in both."
Sales for the protein group, which includes the Company's Meat Products Group and Agribusiness Group, declined 0.9% to US$837.6 million in the third quarter of 2012, from US$845.1 million for the prior year period.
Meat Products Group sales for the third quarter declined 2.1% to US$761.2 million from US$777.2 million for the third quarter last year. After adjusting for the impact of a weaker Canadian dollar, which increased the sales value of pork exports, sales declined 2.9%, primarily due to lower foodservice sales in the prepared meats business.
Adjusted Operating Earnings for the third quarter increased 38.9% to US$28.8 million compared to US$20.8 million last year, driven by strong earnings growth in the prepared meats and fresh poultry businesses.
Sales of higher value products under the Maple Leaf Prime chicken brand and improvements in industry poultry processor margins drove higher earnings in the fresh poultry operations. Earnings in primary pork processing were consistent with last year as higher pricing and margins in international exports were offset by weaker industry margins in North America.
Sales in the Agribusiness Group increased 12.6% to US$76.5 million for the third quarter compared to US$67.9 million last year, reflecting higher toll feed sales. Adjusted Operating Earnings for the third quarter of 2012 decreased 30.7% to $17.6 million compared to $25.4 million last year. Hog production earnings were lower due to a combination of higher feed costs and lower market prices for hogs. Lower earnings in the by-products recycling operations compared to historically strong levels last year as prices paid for raw materials and operating costs increased.