April 27, 2007
Maple Leaf Foods reports first quarter results
Maple Leaf Foods Inc reports sales that as of first quarter ending March 31, 2007, has increased two percent to US$1.5 billion while earnings from operations before restructuring and other related costs increased 18 percent to $61 million from $51.8 million in the first quarter last year.
Headquartered in Toronto, Canada, the company employs approximately 24,000 people at its operations across Canada and in the United States, Europe and Asia. The company had sales of $5.9 billion in 2006.
In the first quarter of 2007, the company recorded restructuring and other related costs of $13.1 million ($9.6 million after tax and minority interest). Of the total, $6.8 million was directly invested to the company's reorganization of its protein operations to focus on growth in the value-added meats and meals businesses. The balance of the restructuring costs was also due to the previously announced shutdowns of a poultry facility in Nova Scotia and a bakery in Langley, British Columbia.
Operating earnings for the first quarter before restructuring and other related costs increased by 18 percent from last year, as a result of a 23 percent increase in earnings in the Protein Group and a 12 percent increase in the Bakery Group. Protein Group earnings were driven by improved fresh meat margins, which more than offset lower hog earnings due to higher corn prices, and reduced margins in prepared meats.
Meat Products Group sales for the first quarter dropped 3 percent to $896 million, due to lower international trading sales, as certain trading businesses were wound down as part of the company's strategic re-alignment.
Earnings from operations before restructuring and other related costs increased to $21.3 million from $13.7 million last year. The improved protein markets and primary processor margins as well as improved operating efficiencies have resulted to increased profits in the company's fresh pork and poultry operations. However, higher meat costs pressured margins in the consumer foods businesses, as price increases could not be implemented quickly enough to offset increased input costs.
Price increases are being implemented in most processed meat categories in the second quarter. Earnings were also affected by higher promotional and advertising costs related to new product launches.
During the quarter, the company launched Maple Leaf Simply Fresh, a new line of refrigerated, single-serve entrees, meal kits, and soups that are available across Canada. Manufactured at its new Brampton facility, These products--manufactured in its Brampton facility--include pork, chicken, or beef and vegetables, and carry the Heart and Stroke Foundation's Health Check symbol.
This new line reflects the company' supporting expansion in the higher margin chilled meats and meats market.