Maple Leaf Foods Inc. has reported its financial results for the fourth quarter and year ended December 31, 2008.

Profits were down 40 percent in the fourth quarter, overshadowed by the product recall caused by listeria contamination which is estimated to have cost the company CA$40-50 million before taxes, according to Michael McCain, President and CEO.

McCain said the company had improved many business areas, including increasing benefits from the protein business restructuring, nearly recovering packaged meats volumes and steadily regaining consumer confidence.

Sales for the fourth quarter increased by 5.2 percent to CA$1.3 billion compared to the same period last year, and sales for the year were consistent at CA$5.2 billion.

While sales were impacted by the divestiture or exit of non-core businesses and a decline in meat volumes in the second half of 2008 due to the recall, price increases, fluctuations in the Canadian dollar and contributions from acquisitions contributed to sales for the fourth quarter and year to date.

Fourth quarter earnings from continuing operations before one-time direct product recall, restructuring and other related costs decreased 38.9 percent to CA$35.4 million and by 35.5 percent to CA$128.4 million for the year.

Adjusted Operating Earnings for the fourth quarter were a loss of CA$2.1 million compared to earnings of CA$44 million last year. For the year, adjusted operating earnings were CA$29.5 million compared to CA$94.1 million last year.

Adjusted Operating Earnings for the fourth quarter were impacted by an estimated CA$40-50 million before taxes as a result of the packaged meats product recall that occurred in August, 2008. This reflected lower sales and higher supply chain costs, the suspension of price increases to offset rising meat costs, and delays in planned promotional activities. In addition, one-time recall costs were CA$18.5 million in the quarter and CA$37.5 million for the total year.

Earnings from poultry operations declined due to lower industry processor margins and the cost of a six-week strike at the company's Edmonton plant, while the fresh pork processing operations had a strong quarter, benefiting from efficiencies gained through the closure of three plants and the consolidation of production into scale plants in Brandon and Winnipeg. The ongoing restructuring of the protein business contributed materially to earnings in the quarter and year, and these initiatives will continue through 2009.

Agribusiness earnings also include a CA$3 million government stability grant received in the quarter related to previously owned hog production operations in Ontario. Earnings from the rendering operations increased in the fourth quarter, although pricing of rendered products continued to decline through the quarter and into 2009 as commodity markets normalized from the unprecedented high prices in the first half of 2008.

''We look forward to improving trends in 2009,'' McCain said.

US$1 = CA$1.24348 (Feb 25)