Net income for the first quarter ended March 31 totaled C$42.3 million ($32.8 million), or 28 cents (22 cents) adjusted earnings per share, compared with a net loss of C$2.9 million ($2.3 million), or 5 cents (4 cents) adjusted earnings per share, reported in the year-ago period.
The company retooled its prepared meats network as part of a $1 billion organizational makeover that started in 2010. Since then, Maple Leaf has restructured and streamlined its processing operations by consolidating distribution centers, and simultaneously closing legacy plants while building new facilities including a 400,000-sq.-ft. processing plant.
“In this quarter we made excellent progress in reducing ramp-up operational inefficiencies in our supply chain, and we saw improvements in margins driven by innovation and product mix,” Michael McCain, president, and CEO said in a statement. “Maple Leaf Foods bears little resemblance to the company we were in 2010. It is stronger. It is globally competitive. It is at the leading edge of innovation. It is building a sustainable future. And we are committed to making the next chapter as rewarding as the last.”
Sales for the quarter climbed 2.1 percent to C$796.9 million ($618.6 million) compared to C$780.2 million ($605.6 million) last year.
On a segment basis, the Meat Products Group reported adjusted operating earnings of C$61.3 million ($47.6 million) compared to C $7.9 million ($6.1 million) in the first quarter of 2015. Tailwinds for the business included lower operating costs, an improved sales mix, and higher prices, which were partially offset by lower volume. Fresh pork earnings advanced on stronger contributions from value-added Canadian retail sales and higher industry and export margins. Higher retail branded sales, operating efficiency gains, and positive industry margins lifted earnings from fresh poultry, the company said.
“The company made continued progress in increasing operating efficiencies in the new prepared meats plant network, primarily at its largest scale facility in Hamilton, Ontario,” Maple Leaf said. “Lower operating costs also resulted from the elimination of duplicative overhead costs that were incurred last year when the Company continued to operate legacy plants slated for closure.”
Sales in the Meat Products Group increased 2.1 percent to C$793.0 million ($616 million). Sales declined 0.9 percent after adjusting for foreign exchange impact. Fresh pork sales were higher, driven by foreign exchange rates while fresh poultry sales climbed on stronger volume and improved sales mix, the company reported. Sales of prepared meats retreated in the quarter short-term volume decline and the exit of lower-margin business offset the benefit of higher prices.
Maple Leaf’s Agribusiness Group reported an adjusted operating earnings loss of C$7.7 million ($6.0 million) due to lower prices for hogs.
Maple Leaf declared a dividend of 9 cents (7 cents) per share payable June 30 to shareholders of record at the close of business on June 6.