TORONTO, ONTARIO-Maple Leaf Foods Inc. (TSE/ME:MFI) today announced record
operating results for the quarter ended June 30, 1999. Sales grew by 9 percent
and operating earnings increased 88 percent in the period. Both the Meat
Products Group and the Agribusiness Group reported strong results, while the
Bakery Products Group’s results were lower than last year, as anticipated. The
Bakery Products Group’s results are expected to improve in the second half of
the year.
Financial Results
Sales for the second quarter of $896 million were up by 9 percent from $822
million last year, in spite of substantially lower commodity prices.
Year-to-date sales of $1.77 billion were up 13 percent from $1.56 billion last
year.
Earnings from operations for the second quarter of $37.1 million were up 88
percent from $19.8 million last year. Year-to-date earnings from operations of
$66.4 million were up 115 percent from $30.9 million, before a special charge,
last year.
Net earnings for the quarter were $23.3 million ($0.24 per share), including a
$6.6 million ($0.07 per share) gain on the sale of the Franchise Operations,
compared to $4.3 million ($0.05 per share) last year. Year-to-date net earnings
were $34.1 million ($0.34 per share), including a $6.6 million ($0.07 per
share) gain on the sale of the Franchise Operations, compared to a loss of
$49.6 million ($0.53 per share) last year. Net earnings for the first half last
year reflect a pre-tax special charge of $82.9 million.
Mr. Michael H. McCain, President & Chief Executive Officer of Maple Leaf
Foods, said: “We are pleased with the financial results for the second quarter,
and with the strategic progress that is being made in all of our operating
companies. We believe the results to-date are beginning to demonstrate the
enormous potential for winning long term through our intense focus on
leadership and leadership development.”
Meat Products Group
Meat Products Group sales for the second quarter of $556 million increased by
14 percent from $487 million last year. Year-to-date sales of $1.08 billion
were up 18 percent from $917 million last year. Earnings from operations for
the second quarter were $17.4 million compared to a loss of $1.3 million last
year. Year-to-date earnings from operations were $35.2 million compared to $0.2
million last year. Results in the second quarter last year were adversely
affected by the labour dispute.
Maple Leaf Pork reported satisfactory results, with earnings above last year
but below those of the first quarter this year due to seasonality. The new
labour agreement for the Winnipeg, Manitoba plant became effective April 1,
1999, and a labour agreement for the Brandon, Manitoba fresh pork facility was
ratified in July. The Brandon, Manitoba fresh pork plant is scheduled to open
in September 1999.
Maple Leaf Consumer Foods earnings were substantially improved over last year.
Sales of Ready Crisp pre-cooked bacon and Top Dogs nutritionally superior
wieners were strong throughout the quarter. Excellent market share gains were
achieved in packaged meats. A new collective labour agreement for the Bartor
Road plant in Toronto, Ontario was ratified in July.
Maple Leaf Poultry continued to record improved volumes and profits,
principally due to continued growth in Maple Leaf Prime branded chicken sales,
along with improved manufacturing and operating efficiencies. Maple Leaf Foods
International recorded excellent results due to strong demand from global
markets, particularly in Asia.
Bakery Products Group
Bakery Products Group sales for the second quarter of $173 million increased by
4 percent from $167 million last year. Year-to-date sales of $348 million were
up 7 percent from $324 million last year. Earnings from operations for the
second quarter of $1.9 million declined from $5.7 million last year.
Year-to-date earnings from operations were $2.2 million compared to $8.1
million last year. Mr. McCain said: “We are confident that the Bakery Products
Group’s financial results will begin to improve in the second half of the year
and our objective in the years ahead is to far exceed historical performance.”
Canada Bread Company, Limited reported an increase in sales in the quarter over
last year, however, earnings from operations declined. Canada Bread has been
implementing dozens of specific change initiatives to effect a turnaround in
results, and to provide a solid foundation for further growth. In the United
States, gains continue to be made in sales of core par-baked bread products,
where the Company has a leadership market position.
Agribusiness Group
Agribusiness Group sales for the second quarter of $167 million were even with
sales last year. Year-to-date sales of $334 million were up 5 percent from $319
million last year. Earnings from operations of $17.7 million were up 15 percent
from $15.4 million last year. Year-to-date earnings from operations of $29.0
million were up 28 percent from $22.6 million last year.
Shur-Gain reported strong earnings gains due to excellent results in both its
animal feed and pet food product lines. The Company continues to liquidate its
live hog investment in Quebec. Construction of the new mill tower in St.
Mary’s, Ontario is proceeding on schedule and is expected to be completed by
December. Rothsay earnings declined marginally due to the impact of lower
commodity prices.
Other Information
The sale of the Company’s Franchise Operations was completed during the
quarter. Net proceeds of $39.3 million were realized, and a gain on the sale of
$9.7 million before tax ($0.07 per share after taxes), was recorded. Other
income for the second quarter of $1.6 million compares to $1.5 million last
year.
The Company has in place a process designed to minimize the effects of the Year
2000 issue on the Company. As at June 30, 1999 the assessment and remediation
phase related to the Company’s internal computer systems was essentially
complete. A process to address the readiness of key third parties such as
suppliers and customers is ongoing. It is, however, not possible to be certain
that all aspects of the Year 2000 issue affecting the Company, including those
related to the efforts of customers, suppliers, or other third parties, will be
fully resolved.
The Company declared a dividend of $0.04 per share payable on September 30,
1999 to shareholders of record on September 17, 1999.