TORONTO — Maple Leaf Foods’ efforts to improve the structure and efficiency of its prepared meats network led to a loss during fiscal 2013, ended Dec. 31, 2013. For the year the company recorded a loss of C$12,251,000 ($10,997,000), a significant decline compared with the previous year when adjusted operating earnings were C$172,019,000, equal to C25c per share on the common stock.
Sales for the year were C$4,406,448,000, a slight decline compared with fiscal 2012 when the company sold $4,551,828,000 worth of goods.
“We are in a peak phase of executing our prepared meats network strategy, which added tremendous costs and inefficiency in the quarter as we ramped up five new facilities while continuing to operate our parallel older plants,” said Michael H. McCain, president and chief executive officer. “As expected, this is causing short-term earnings volatility, which was compounded by weak protein markets.
“For three years we have been building a new plant network, which entered a peak period in December 2013 as we began commissioning Maple Leaf’s single largest facility in Hamilton (Ont.). Now the focus changes: From here on, our job is to get the new plants running at peak performance, transfer production from older high cost plants to new low cost plants, and close the older plants down. Once completed, later this year, we expect to start seeing significant structural margin expansion.”
Maple Leaf’s Meat Products Group recorded a whopping C$86,192,000 loss during the year compared with adjusted operating earnings of C$98,367,000 the year before. Full-year sales declined 4%, or 2.1% after adjusting for the impact of divestitures and foreign exchange, primarily due to lower volumes in the fresh pork and prepared meats businesses. Partly offsetting the decline was higher commodity prices in fresh pork, price increases in the fresh poultry and prepared meats businesses, and higher fresh poultry volumes.
Sales for the Meat Products Group were C$2,923,857,000 during the year compared with C$3,046,633,000 the year before.
The company’s Agribusiness Group suffered a steeper loss in 2013 compared with 2012, seeing its adjusted operating earnings falling to C$38,258,000 in 2013 from a loss of C$15,453,000 in fiscal 2012. The company pinned the loss on lower contributions from hedging programs, high feed costs and higher selling and general administration expenses.
Sales for the Agribusiness Group were C$235,199,000 in 2013 compared with C$259,181,000.
Maple Leaf’s Bakery Products Group had a positive year in fiscal 2013, with adjusted operating earnings rising to C$113,699,000 during the year compared with operating earnings of C$96,410,000 the previous year.
Sales for the Bakery Products Group were C$1,531,993,000 compared with C$1,567,196,000.
During the fourth quarter of 2013, Maple Leaf recorded a loss of C$21,716,000 compared with earnings of C$69,997,000, equal to C28c per share.Sales for the period were C$1,106,985,000 during the fourth quarter of 2013, compared with sales of C$1,130,675,000 for the same period of the previous year.