Maple Leaf suffers loss in quarter

by Staff
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TORONTO — Maple Leaf Foods Inc. sustained a loss of C$1,671,000 ($1,578,000) during the second quarter ended June 30, which compared with net income of C$21,186,000, equal to C$0.17c per share on the common stock, during the same quarter of 2006.

Sales were C$1,318,773,000 ($1,245,498,000), down 3% from C$1,356,465,000 during the same quarter of last year.

"We are very pleased with our performance in the second quarter from both an operating and a strategic perspective," said Michael McCain, president and chief executive officer. "Our primary focus is the strategic transformation of the business to a focused, value-added meat, meals and bakery company, and we made excellent progress during the quarter. We finalized the sale of our animal nutrition business, we began the process of consolidating hog processing by closing a plant, and we are on track to complete what is a very complex change process. Operationally, we delivered a solid profit performance in the second quarter, which in the context of our activity level and rising grain and meat raw material costs, was an excellent accomplishment."

Earnings from continuing operations for the Meat Products Group were C$14,800,000 during the quarter, a 9% increase compared with C$13,600,000 during the same quarter of 2006. Sales in the group declined 8% to C$879 million as a result of lower international trading sales. During the quarter, the company also closed a pork processing facility in Saskatoon and announced it would be closing two other meat processing facilities. By the end of 2009, the company will consolidate all its primary pork processing at the Brandon plant.

In the Agribusiness Group, earnings from continuing operations were C$4,600,000, a 7% increase compared with C$4,200,000 during the same quarter of the previous year. Sales from continuing operations decreased from C$66 million during the same quarter of last year to C$64 million this year.

Earnings from continuing operations for the Bakery Products Group were C$33,300,000, up 15% from C$29,000,000 during the same quarter of 2006. Sales for the quarter were C$375,000,000, a 12% increase compared with C$335,000,000 last year.

On July 20, Maple Leaf completed the sales of its animal nutrition business to Nutreco Holdings NV for C$512 million plus closing adjustments, and the company anticipates it will have an after-tax gain in the third quarter of about C$210 million on the transaction, and about C$190 million after a C$20.7 million goodwill impairment charge related to the transaction.

Overall during the second quarter, Maple Leaf had restructuring and other costs from continuing operations of C$30,700,000, and the company said it will have total restructuring costs of C$165 million to C$215 million between 2006 and 2009.

For the six months ended June 30, the company reported net earnings of C$8,792,000, down 77% compared with net earnings of C$38,458,000 during the same period of the previous year. Sales were C$2,634,908,000, nearly flat compared with C$2,642,762,000 during the same period of 2006.

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