Maple Leaf closes Kitchener plant

by Erica Shaffer
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MISSISSAUGA, Ontario – Maple Leaf Foods reported a fourth-quarter loss as the company continues to feel the pain of closing its network of legacy production plants. In fact, the largest legacy plant in Maple Leaf Foods' network of production facilities is officially closed. The plant in Kitchener, Ontario is the seventh of eight legacy plants to close as part of the company's modernization initiative.

Maple Leaf reported a quarterly loss Feb. 26, although the company was able to narrow the negative result. Net loss from continuing operations for the fourth quarter was C$23 million ($18.3 million) compared to a loss of C$47.9 million ($38.3 million) in the year ago quarter. For the year, Maple Leaf reported a net loss of C$213.8 million ($171.1 million) for the year compared to C$141.4 million ($113.1 million) last year.

Michael H. McCain, president and CEO, said 2014 was a pivotal year for Maple Leaf Foods, saying the drive to rebuild the company's network of processing operations is nearing an end.

“We have completed what we set out to accomplish in 2007 and finished the year with new momentum,” he said.

“Our margins have been structurally reset over the year, and while volume continued to be weak in the fourth quarter, we expect it to recover in 2015 as the fundamental environment continues to improve. We are confident that we will deliver our strategic targets in 2015.”

Revenues for the quarter climbed 6 percent to C$794 million ($635.1 million) on higher prices. The company raised prices on its prepared meats offerings to offset rising prices for raw materials.

“The company was able to manage margins through a very turbulent raw material market; however the size of the price increase and its impact on specific sensitive categories has caused the related volume response and recovery to take longer than expected,” the company said in its earnings report.

The Kitchener plant closure is expected to be accretive to results staring in the second quarter, the company said.

Maple Leaf announced its intent to close the Kitchener plant in 2011 as part of a company-wide initiative to increase competitiveness and efficiency throughout its prepared meats operations. Maple Leaf transferred the Kitchener plant production throughout its network of processing plants, primarily to a new 400,000-sq.-ft. prepared meats plant in Hamilton, Ontario. A majority of the employees transitioned into new jobs within Maple Leaf Foods or with other companies.

“While today marks the end of one era, it is a critical milestone in establishing Maple Leaf as a sustainably competitive and profitable Canadian food company," McCain said. “We are well along with transitioning production to our new, state-of-the-art facility in Hamilton and realizing the benefits of our modernized network.”
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