October 31, 2013
Maple Leaf's sales slip in first three quarters of 2013
Maple Leaf Foods Inc. (Maple Leaf) reported its financial results for the third quarter on October 30, 2013.
Maple Leaf's sales of CAD1.15 billion (US$1.10 billion) for the third quarter declined 2.5% from 2012, or 1.1% after adjusting for the impacts of divestitures and foreign exchange, due to lower volumes which were partly offset by higher pricing and improved sales mix. For the nine months ended September 30, 2013, sales decreased 3.6% from the prior year to CAD3.36 billion (US$3.21 billion), or 2.1% after adjusting for divestitures and foreign exchange, due to the same factors.
Adjusted Operating Earnings for the third quarter decreased 61.1% to CAD18.6 million (US$17.75 million) compared to CAD47.9 million (US$45.70 million) last year, as earnings in the Protein Group were impacted by higher costs related to the implementation of its prepared meats strategy and poor commodity market conditions, which were only partly offset by stronger Bakery Group results. For the nine months ended September 30, 2013, Adjusted Operating Earnings declined 88.2% to CAD12.0 million (US$11.45 million) compared to CAD102.3 million (US$97.59 million) last year, due to similar factors noted above.
Net earnings from continuing operations for the third quarter were $nil (a loss of US$0.02 per basic share attributable to common shareholders) compared to CAD11.4 million (US$10.88 million; US$0.06 per basic share attributable to common shareholders) last year. Net earnings from continuing operations included CAD15.1 million (US$14.41 million; US$0.08 per basic share attributable to common shareholders) of pre-tax expenses related to restructuring and other related costs (2012: CAD4.6 million (US$4.39 million), or US$0.02 per basic share attributable to common shareholders).
Year-to-date net loss from continuing operations was CAD42.2 million (US$40.26 million; loss of US$0.32 per basic share attributable to common shareholders) compared to net earnings of CAD1.2 million (US$1.14 million; a loss of US$0.02 per basic share attributable to common shareholders) last year. The year-to-date net loss included CAD77.9 million (US$74.32 million; US$0.40 per basic share attributable to common shareholders) of pre-tax expenses related to restructuring and other related costs (2012: CAD34.7 million (US$33.10 million), or US$0.18 per basic share attributable to common shareholders).
"This is a very challenging period of transition for the Maple Leaf organisation, as the short-term impact of volatile protein market conditions, combined with the significant cost of change, has been material," said Michael H. McCain, President and CEO. "We have five significant operational start-ups occurring simultaneously, during a year when commodity markets have not been friendly. However, these transitory conditions do not detract from the underlying strength of the business or the strategic direction. Our commercial performance is solid and we are satisfied with the progress we are making in implementing our prepared meats strategy. Our bakery business is performing at record levels as we come into the back half of 2013. Through exploring strategic alternatives, we are committed to optimizing the value of this business, either as part of Maple Leaf or under new ownership."
Maple Leaf is a leading Canadian value-added meat, meals and bakery company delivering quality food products to consumers around the world. Headquartered in Toronto, Canada, the company employs approximately 20,000 people at its operations across Canada and in the United States, Europe and Asia.