Maple Leaf sees significant progress in earnings

by Staff
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TORONTO — Buoyed by the strength of its bakery business and recovery in its packaged meats business, Maple Leaf Foods Inc. posted earnings of C$22,457,000 ($20,773,000), equal to C$0.17 per share on the common stock, in the third quarter ended Sept. 30. This compared with a loss of C$12,919,000 in the third quarter of fiscal 2008. Results continued to be adversely affected by a major product recall that occurred last year.

Adjusted operating earnings, which are defined as earnings from operations before restructuring and other related costs and other income, totaled C$63,031,000 ($58,300,000), up from C$41,077,000 in the same period a year ago.

Sales for the third quarter fell 4% to C$1,296,597,000 ($1,199,454,000) from C$1,344,334,000.

"Our third-quarter results showed a very material increase in profitability compared to last year and prior historical levels and we are very pleased with this significant progress," said Michael H. McCain, president and chief executive. "We benefited from the core strength of our bakery business, combined with substantial recovery in our packaged meats business. The sustainable earnings improvements from the protein restructuring implemented over the past three years are now more visible in our results. While we are making great progress, we still have to complete the work under way to fuel higher growth and margins consistent with our consumer packaged goods peer group."

Adjusted operating earnings in the Meat Products Group rose to C$18,111,000 ($16,755,000) in the third quarter compared with $812,000 in the same period a year ago. Sales, meanwhile, fell 3% in the quarter to C$815,610,000 ($754,564,000).

Maple Leaf said prepared meats performance benefited from lower raw material costs, while volume continued to trend close to historical levels.

"Management remains focused on driving volume growth and improving earnings in this business, which is not yet performing to full potential," Maple Leaf said. "In addition, the company plans to make investments in this business to improve efficiencies and reduce supply chain costs."

During the third quarter, Maple Leaf reintroduced resealable packaging for deli meats and bacon, and also launched Maple Leaf Gourmet, a line of five ready-to-bake and serve gourmet fresh chicken and pork entrees.

Within its Agribusiness Group, adjusted operating earnings in the third quarter increased to C$15,062,000 ($13,934,000) from C$12,336,000. Sales in the group fell 12% to C$55,813,000 ($51,635,000).

"Benefits from restructuring have improved results in hog production," Maple Leaf said. "Hog production in North America, however, continues to be unprofitable as a result of lower market prices. Earnings from rendering operations, which include biodiesel production, were slightly lower than last year due to lower commodity prices that decreased the value of rendered byproducts."

Adjusted operating earnings in Maple Leaf’s Bakery Products Group rose to C$32,749,000 ($30,297,000) from C$30,550,000, while sales eased 4% to C$425,174,000 ($393,351,000).

Maple Leaf said the earnings increase was driven by lower commodity costs that improved margins in the North American fresh and frozen bakeries and pasta operations. Partially offsetting the gains were disappointing results in the fresh sandwich business and U.K. bakery operations.

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