Restructuring costs lead to a loss at Maple Leaf

by Staff
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TORONTO — Maple Leaf Foods Inc. saw income for its full year and fourth quarter fall as charges relating to the reorganization of the company’s protein operations took a chunk out of results.

Net income for the year ended Dec. 31, 2006, totaled C$4,525,000 ($3,898,013), down substantially from net income of C$94,242,000 in 2005. Total charges for the year totaled C$64.6 million, C$49.5 million of which came from the pork value chain reorganization.

Net sales for the year fell 4%, totaling C$5,895,218,000.

The company’s Meat Products Group saw year-end earnings from operations rise 24% to C$74.4 million. Earnings from operations in the company’s Agribusiness, Protein Value Chain and Bakery Products Group all fell, by 52%, 24% and 15%, respectively.

For the fourth quarter ended Dec. 31, the company recorded a loss of C$11,624,000, compared with a net gain of C$18,196,000 in the same period last year. Charges for the fourth quarter totaled C$44.9 million, C$29.8 of which stemmed from the reorganization of the pork value chain.

Net sales for the quarter totaled C$1,514,806,000, down slightly from sales of C$1,518,561,000 in the fourth quarter of 2005.

Fourth-quarter earnings from operations rose 264% to C$37.9 million in the company’s meat products group, due to strength in the consumer foods operations and price increases.

Earnings from operations in the Agribusiness group fell 79% for the quarter due to substantially higher feed costs as well as the reorganization of the protein business.

The Protein Value Chain saw earnings from operations rise 44%. Earnings from operations in the Bakery Products group rose 4% following the successful launch of Dempsters Smart bread.

"We are moving forward aggressively with a major reorganization of our protein businesses to re-align the company's focus on value-added meats and meals and bakery consumer products," said Michael McCain, president and chief executive officer of Maple Leaf. "We expect 2007 will be a year of change as we align operations to the new protein business model. The reward for investors will be a simpler, more profitable company with leading market shares in the higher margin, high growth meats and meals and bakery sectors of the global food industry, reduced exposure to currency and commodities, and lower earnings volatility."

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