August 2, 2006

 

Maple Leaf earnings down by 30 percent

 

 

Maple Leaf Foods sales for the second quarter fell to US$1.5 billion compared with US$1.6 billion for the year before, largely due to lower commodity prices of export products. Year-to-date sales fell 5 percent to US$2.9 billion.

 

In the second quarter, earnings fell almost 30 percent from US$78.7 million last year to US$60.4 million, while year-to-date earnings decreased to US$112.2 million from US$139.8 million in the first six months last year.

 

The year-to-date earnings exclude US$13.2 million in restructuring costs during the first quarter. The company believes restructuring costs are not representative of continuing operations.

 

Net earnings for the quarter declined to US$21.2 million from US$33.2 million in the second quarter last year.

 

Year-to-date net earnings were US$38.5 million compared to US$54.3 million before restructuring costs last year.

 

With restructuring costs factored in, net earnings for the first six months of 2005 would be US$46.0 million.

 

Unfavourable currency rates and an abundant meat supply weakened the company's performance in the quarter, said Michael McCain, president and chief executive officer.

 

Margins in both hog production and primary processing were affected and the company is taking several long-term measures to offset these impacts.

 

Maple Leaf would realign their protein value chain operations, invest in value-added processing and new product innovation and implement significant manufacturing optimisation and cost reduction initiatives, McCain said

 

He also added that results for the second half of the year would reflect restructuring costs related to these actions.

 

The company also hopes to make strategic acquisitions to broaden its sales mix and expand its global operations.

 

Meat products group sales for the second quarter fell 10 percent to US$955 million, as pork sales values declined along with volume of frozen pork to Japan. Year-to-date sales were US$1.9 billion compared to US$2.1 billion last year. Earnings for the second quarter declined 29 percent to US$13.6 million from US$17.5 million last year.