Maple Leaf net earnings up in Q4

by Bryan Salvage
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TORONTO — Maple Leaf Foods Inc. announced for the fourth quarter ended Dec. 31, net earnings increased to $21.9 million or $0.16 per share compared to a net loss of $14.6 million or $0.12 per share last year. For the year, net earnings totaled $52,147,000 compared to a net loss of $36,857,000 in 2008.

Sales decreased 1% to $1,324.9 million for the quarter compared to $1,339.7 million from the same year-earlier quarter, while sales for the year were consistent at $5.2 billion.

Meat Products Group (value-added prepared meats; chilled meal entrées and lunch kits value-added fresh pork, poultry and turkey products) sales for the fourth quarter were largely consistent with last year. Sales totaled $842.2 million compared to $846.3 million for the same year-earlier period. For the year, group sales totaled $3,310,393,000 compared to $3,303,694,000 in 2008.

Adjusted operating earnings in the Meat Products Group increased to $24.2 million compared to a loss of $2.1 million last year. For the year, adjusted operating earnings were $55.4 million compared to $29.5 million last year. Fourth-quarter earnings benefited from an increased contribution from the prepared meats business following a major product recall in August 2008.

Although earnings are higher, they compare with a quarter that was materially impacted by the August 2008 product recall, and there still remains significant room to further increase sales and profitability, the company said.

Volumes in the prepared meats business continued to trend closer to historical levels, while margins increased compared to the fourth quarter of last year mainly due to lower raw material and packaging costs, the benefit of a stronger Canadian dollar and normalized supply chain operations.

Although earnings performance has improved compared to the prior year, margins were compressed in the latter part of the fourth quarter as the expected seasonal declines in meat prices did not materialize, with raw material prices rising sharply in December.

Earnings were lower in primary processing due to an increase in live hog market prices that compressed margins. Reduced pork earnings were partly offset by improved fresh poultry results due to better industry processor margins and operating efficiencies.

"The increased earnings in the fourth quarter reflect significantly better performance in our protein business, offset slightly by a softer quarter in the bakery segment," said Michael H. McCain, president and chief executive officer. "Our prepared meats results improved substantially, although an unexpected, counter seasonal run-up in raw material costs compressed margins in both primary processing and prepared meats late in the quarter.

"In 2009, we substantially completed the restructuring of our protein operations and focused our company on higher margin consumer packaged goods,” he added. “Looking ahead, our priority is to increase earnings and margins to levels consistent with our peers. We have work to do on this goal and it will involve achieving the full potential of our prepared meats business, investing in our plant network to reduce costs, and delivering higher levels of organic growth."
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