Cost-cutting and price hikes helped offset higher costs for corn, wheat and other inputs on Maple Leaf’s third-quarter bottom line, the company reported Thursday.
The quarter ending Sept. 30 included an after-tax gain of $218 million on the sale of Maple Leaf’s animal feed businesses to Dutch firm Nutreco, which led to skewed net earnings of $220 million on slightly lower Q3 sales of $1.3 billion.
Maple Leaf CEO Michael McCain said in a release that the gains from the feed business sale “provide us with a very strong balance sheet and cash to reinvest in our core businesses.”
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The company reported earnings from continuing operations of $38.6 million, up 14 per cent from $33.9 million in the year-earlier period, calling that “the most appropriate measure on which to evaluate operating results” in this quarter. Its net earnings from continuing operations after taxes and interest, however, came in at $1.7 million, up from a net loss of $28.2 million from continuing operations in the year-earlier quarter.
McCain said the company’s value-added meat and bakery businesses were meeting higher costs by investing in their supply chains, improving their processes and offsetting those input costs with “selective price increases.”
The company said its fresh poultry operations earnings increased despite rising live bird costs, driven mostly by plant efficiencies and higher commodity sales prices. The stronger Canadian dollar, meanwhile, pressured earnings in the company’s fresh pork operations.
Part of Maple Leaf’s restructuring plan, as first announced in October 2006, was to drop the volume of pork it processes to a level that supports its own needs for its further-processed products, and to consolidate all its fresh pork processing at its plant in Brandon, Man. The company launched a second shift in the front end of its Brandon plant early last month, increasing hogs processed to about 13,000 per day. The plant is on schedule to reach 75,000 hogs per week in the fourth quarter.
The restructuring plan also included the recent closures of two pork plants, one each in Saskatoon and Winnipeg, which together processed about 1.7 million hogs a year.
