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Maple Leaf Results Hit by Rising Raw Material Costs

by 5m Editor
29 October 2010, at 9:08am

CANADA - Maple Leaf Foods Inc. has reported its financial results for the third quarter ended 30 September 2010. Sales were flat overall but results from the Meat Group were improved.

According to the quarterly report, Maple Leaf's sales were consistent with last year at C$1.3 billion, while Adjusted Operating Earnings* increased two per cent to to $64.5 million from $63.0 million last year.

Adjusted EPS increased 10 per cent to $0.23 compared to $0.21 last year.

The net loss in the quarter, which included $48.1 million of non-cash pre-tax adjustments, was $16.1 million compared to net earnings of $22.5 million last year.

* Note: Adjusted Operating Earnings measures are defined as earnings from operations before restructuring and other related costs, other income and the impact of the change in fair value of interest rate swaps. Adjusted Earnings per Share ("Adjusted EPS") measures are defined as basic earnings per share adjusted for the impact of restructuring and other related costs and the impact of the change in fair value of interest rate swaps, net of tax and non-controlling interest.

Michael H. McCain, President and CEO, commented: "The rapid rise in raw material costs in both grains and meat proteins, is the story for 2010. Notwithstanding this significant inflation, we realised our sixth consecutive quarter of earnings growth, continued margin expansion in the protein segment, and double-digit earnings per share improvement over last year. 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."

Financial overview

Third quarter 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 two per cent. Adjusted Operating Earnings increased two per cent to $64.5 million compared to $63.0 million last year. 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.

Net loss, including a non-cash pre-tax charge of $14.6 million due to the change in fair value of long-term interest rate swaps not designated in a formal hedging relationship and $50.0 million in restructuring costs (including $33.5 million of non-cash charges), was $16.1 million in the third quarter of 2010 compared to net earnings of $22.5 million last year. Year-to-date net loss was $4.4 million compared to net earnings of $30.2 million last year.

Further Reading

- You can view the full report by clicking here.