TORONTO – Although Maple Leaf Foods Inc. suffered a net loss of $16.1 million compared to net earnings of $22.5 million last year for its third quarter ended Sept. 30, its Meat Products Group reported an increase in adjusted operating earnings and sales.

The net loss included $48.1 million of non-cash pre-tax adjustments, was $16.1 million compared to net earnings of $22.5 million last year. Overall company sales of $1,293.2 million were consistent with last year. Excluding currency impacts related to the UK and US bakery operations and fresh pork sales, sales increased by 2%.

The rapid rise in raw material costs in both grains and meat proteins “is the story for 2010,” according to Michael McCain, president and CEO. "Notwithstanding this significant inflation, we realized our sixth-consecutive quarter of earnings growth, continued margin expansion in the protein segment and double-digit earnings per share improvement over last year,” he added. “This steady progress reflects our focus on near-term value creation and implementing initiatives across our businesses to increase margins and growth that are expected to deliver significant return to shareholders now and through 2015."

Improved results in the Meat Group, supported by better performance in fresh pork and poultry, were partly offset by lower earnings in the Bakery Products Group, mostly due to lower volume and increased investment to support product launches, advertising and promotions. The company’s Meat Group includes value-added prepared meats, chilled meal entrées and lunch kits; and fresh pork, poultry and turkey products sold to retail, foodservice, industrial and convenience channels. Includes leading Canadian brands such as Maple Leaf, Schneiders and other leading sub-brands.

Meat Group sales for the third quarter increased 2% to $834.7 million from $815.6 million in the third quarter last year. Excluding the impact of a stronger Canadian dollar that reduced the value of fresh pork sales, sales increased by 4%. Improved pork markets, higher net pricing in prepared meats and improved sales mix contributed to increased sales. These benefits were partly offset by reduced volumes in fresh pork and prepared meats as consumers continue to adjust to new price points.

This group’s adjusted operating earnings increased to $21.5 million compared to $18.1 million last year, reflecting higher market prices for fresh chicken and pork and improved operational efficiencies in the company's poultry operations. Although margins in the prepared-meats business benefited from improved net pricing and early operational benefits of product simplification, profitability in the business was impacted by lower volumes as consumers adjust to new price points.

Margins continue to be pressured by further increases in raw material meat costs that resulted in continued focus on price adjustments during the quarter.

Management is focused on implementing near-term initiatives to increase margins in the prepared-meats business as part of its recently announced value creation plan. In order to streamline product mix, significant changes are being implemented to standardize ingredient formulations, product sizes and specifications across all categories. These initiatives will be completed during 2011, and are expected to reduce complexity for customers and improve operating efficiencies.

Sales for Maple Leaf Foods’ Agribusiness Group, which consists of Canadian hog production and animal by-product recycling operations, declined 15% to $47.5 million from $55.8 million in the third quarter last year due to lower sales values and volumes in the rendering operations.

Adjusted operating earnings for the group increased to $15.8 million from $15.1 million in the third quarter last year. Earnings from hog production operations improved thanks to higher hog-market prices and lower feed costs. Stronger performance in hog production was partially offset by lower earnings in the by-product recycling business compared to last year due to lower by-product sales values and volumes.