Maple Leaf earnings make 600% jump

Maple Leaf earnings make 600% jump

- Company credits strength of business and recent strategic initiatives. - Hog and pork production have tough year, but poultry and prepared meats do well.

MAPLE Leaf Foods Inc. has reported significant earnings increases for its 2012 fourth quarter -- up more than 600% -- and full year -- up 40.5% -- despite headwinds in consumer demand for breads and in pork processing.

Earnings improvement is "a strong testament to the strength of our business and strategic initiatives" in recent years, said chief executive officer and president Michael H. McCain.

Financial results for Toronto, Ont.-based Maple Leaf are shown in the Tables.

Maple Leaf said fourth-quarter sales declined slightly due mainly to decreases in sales volumes, and earnings reflected strong improvements in its bakery and meat products groups.

The company noted that it recorded charges related to restructuring of $12.8 million, or 7 cents per share, in the quarter and $47.5 million, or 25 cents per share, in 2012 versus charges of $32.2 million, or 17 cents per share, in the 2011 fourth quarter, and $79.8 million, or 41 cents per share, in 2011.

Going forward, McCain said the effect of the 2012 drought in North America on customers and consumers will be most apparent in the first half of this year. Accordingly, he said the company's earnings will experience "some short-term volatility" as it passes cost increases through to the marketplace.

 

Operating results

For its protein business, which includes the agribusiness and meat products groups, Maple Leaf said fourth-quarter sales declined 3.7% from the year before, but earnings were up 44.0%.

For its agribusiness group, which includes hog production and animal byproduct recycling, including biodiesel manufacturing and distribution, Maple Leaf said sales increased 15.6% in the quarter as lower biodiesel prices offset higher biodiesel and rendering volumes.

The company said earnings fell 14.1% due to a combination of higher feed costs and lower hog prices, higher raw material costs for rendering and lower biodiesel prices.

For its meat products group, which includes fresh pork, chicken and turkey products, as well as lunch kits and value-added prepared meats, Maple Leaf said sales slipped 5.3% in the quarter due to discontinuance of lower-margin accounts in prepared meats and the stronger Canadian dollar that decreased the sales value of pork exports.

Nevertheless, the company said earnings increased 75.2% on strong earnings growth in fresh poultry and prepared meats that was partly offset by lower earnings in pork processing.

The company said fresh poultry benefited from an improved sales mix, including sales of higher-value products such as Maple Leaf Prime chicken. It said prepared meats gained on an improved sales mix, including sales of higher-margin, innovative products, as well as on higher prices passed through to customers to manage higher input costs.

For its bakery business, which includes fresh and frozen bakery products and fresh pasta and sauces, Maple Leaf said sales were down 2.4% in the quarter as higher volumes in the North American and U.K. frozen bakery segment were offset by lower volumes in the fresh pasta segment.

The company said earnings increased 95.0%, with growth in the fresh bakery and North American frozen bakery segments somewhat offset by lower earnings in the fresh pasta segment.

Maple Leaf said it benefited significantly from efficiency gains on the closing of its bakery in Delta, B.C., in late 2011 and the transfer of Delta production to more efficient bakeries in its system. The company said it also benefited from reduced commodity costs due to successful hedging activities.

Maple Leaf noted that it recorded duplicative overhead costs in 2012 as it continued operating three old bakeries while transferring their production to its new, more efficient bakery in Hamilton, Ont. The company said it closed two of the older bakeries in late 2012, and the third is scheduled to be closed in the second quarter of this year.

 

1. Maple Leaf earnings and sales (Canadian $)*

 

-Fourth quarter-

-Full year-

 

2012

2011

2012

2011

 

 

 

 

 

Sales (billion $)

1.205

1.245

4.865

4.894

Earnings (million $)

56.844

9.195

122.714

87.331

Earnings per share (cents)

38

6

81

58

Note: In U.S. dollars, Maple Leaf reported 2012 earnings and sales of $120.564 million and $4.781 billion.

 

2. Maple Leaf operating results (million $, Canadian)*

 

-Fourth quarter-

-Full year-

 

2012

2011

2012

2011

Sales

 

 

 

 

Agribusiness

73.410

63.499

294.713

259.644

Meat products

740.764

781.813

3,003.444

3,039.460

Bakery products

390.603

400.016

1,566.622

1,594.520

Earnings

 

 

 

 

Agribusiness

12.660

14.744

68.436

81.895

Meat products

48.133

27.472

121.272

95.987

Bakery products

31.410

16.129

97.634

86.294

*For the quarters ended Dec. 31, 2012, and Dec. 31, 2011.

 

Volume:85 Issue:13

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