Canadian meat processor Maple Leaf Foods has reported its financial results for the first quarter ended March 31, 2011.
Sales for the first quarter of 2011 decreased 4% to CAN$1,147.9 million compared to $1,191.5 million last year, primarily due to business divestitures. Excluding the effect of divestitures, and the impact of a stronger Canadian dollar, sales increased by 4%.
Adjusted operating earnings increased to $50.7 million compared to $31.5 million last year primarily due to improved performance in the Protein Group.
Net earnings decreased to $10.5 million in the first quarter compared to net earnings of $19.9 million. Net earnings in the quarter included $26.1 million of pre-tax costs related to restructuring activities (2010: $4.0 million).
"Maple Leaf Foods delivered our eighth consecutive quarter of improved results, with a significant increase in profitability in our fresh and prepared meats businesses," said Michael H. McCain, president and CEO.
"We are very pleased with the progress on both short and long-term initiatives. Our value creation plan is on track and contributed to earnings in the quarter. While the most significant challenge has been rising raw material costs, we are passing on price increases to protect our margins. Overall, this was another strong quarter of performance."
Within Maple Leaf Foods, both the Meat Products Group and the Agribusiness Group have a direct relationship to pork production.
Meat Products Group
The Meat Products Group, includes value-added prepared meats, chilled meal entrees and lunch kits; and fresh pork, poultry and turkey products sold to retail, foodservice, industrial and convenience channels.
The group’s sales for the first quarter decreased 7% to $718.2 million from $768.2 million in the first quarter last year, largely due to the sale of the Company's Burlington, Ontario primary pork processing operation in November 2010. Excluding this divestiture and the impact of a stronger Canadian dollar that reduced the sales value of exports, sales increased by 4%.
The business benefited from higher market prices in fresh pork and increased net pricing and improved sales mix in prepared meats, which were partly offset by lower volumes in prepared meats.
The Agribusiness Group consists of Canadian hog production and animal by-product recycling operations.
Sales in the Agribusiness Group for the first quarter increased 37% to $57.3 million from $41.8 million in the first quarter last year. Of this increase, approximately 25% was due to higher sales values, the remainder was related to higher volumes in the by-product recycling business.
Hog prices have increased 18% since last year and outpaced the Company's net cost of grain, contributing to higher earnings. The contribution from by-products recycling operations also increased due to higher biodiesel sales volumes, eco-energy credits that were not received in the first quarter of 2010, and operational improvements. The benefit of higher market prices in the rendering business was mostly offset by higher raw material costs.
In addition, Maple Leaf Foods also has a Bakery Products Group.
• Maple Leaf Foods