July 31, 2007


Maple Leaf Foods sales down, profits up



Maple Leaf, the leading Canadian pig meat processor is finally seeing some good news after a string of lacklustre performance and losses. 


Despite ominous developments and mixed news for the second quarter, the company is pleased with its perfomance.


Michael McCain, president and CEO of Maple Leaf said he is happy with the company's performance from "both an operating and a strategic perspective".


The company's primary focus is the strategic transformation of the business to a focused, value-added meat, meals, and bakery company.


McCain noted that excellent progress for made in that area during the quarter.


The company managed to finalize the sale of its animal nutrition business, began the process of consolidating hog processing by closing a plant, and is on track with the changes it intends to carry out.


Even though sales for the second quarter fell 3 percent to US$1.3 billion, earnings from continuing operations, before restructuring and other related costs, increased 12 percent to US$52.7 million from US$46.8 million last year.


Taking into account the company's activity level and rising costs, the company delivered a solid profit performance, he added.


Year-to-date earnings per share on a comparable basis were US$0.25 compared to US$0.20 last year. The company reported a net loss for the quarter of $1.7 million ($0.01 per share) compared to net earnings of $21.2 million ($0.17 per share) in the prior period.


While pricing to offset higher fresh meat prices was passed through in the second quarter, this did not fully offset the continuous rise in input costs and further price increases are expected through the balance of the year. Industry pork processor margins were slightly lower than last year.


In the second quarter, Maple Leaf closed a pork processing facility in Saskatoon and announced the closure of two other meat processing facilities.


By the end of 2009, Maple Leaf will have consolidated all of its primary pork processing in Brandon. The company also announced the closure of a value-added meat processing facility in Etobicoke, Ontario last year. These operations are being relocated to the company's facility in Brampton, Ontario, where the business will benefit from expanded capacity and new processing technology, the company said.