Maple Leaf Foods has booked a drop in first-quarter profits, hit by restructuring costs and the implementation of the Canadian food group’s plans to improve its margins.
In the three months to the end of March, earnings dropped to C$0.8m (US$0.8m) from C$10.5m in the prior-year quarter. Maple Leaf incurred C$20.4m of pre-tax costs, mostly related to the implementation of the company’s value creation plan, and restructuring costs of C$26.1m.
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Operating profits slid 20% to C$40.5m, primarily due to lower results in the firm’s bakery division.
Sales in the period, however, edged up 1% to $1.16bn, as higher selling prices across the business were partially offset by lower volumes in fresh bakery and fresh pork.
Maple Leaf president and CEO Michael McCain said the results were “challenged”, due primarily to “weak fresh bakery volumes”, an issue he said was affecting the entire industry.
“We are addressing this challenge directly and expect improved results through the remainder of 2012. Conversely, we are very pleased with the results in our protein group, particularly considering the significant decline in commodity industry pork processor margins. While the bakery business had a slow start, we expect to reach our EBITDA margin target run rate later this year,” McCain said.
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