Maple Leaf Foods Posts Record First Quarter - First Quarter Operating Earnings Up 165 percent - EPS of $0.10 up from $0.02 Last Year
TORONTO, ONTARIO-Maple Leaf Foods Inc. (TSE/ME:MFI) today announced record
first quarter operating earnings for the quarter ended March 31, 1999. Mr.
Michael H. McCain, President and Chief Executive Officer of Maple Leaf Foods
said: " The excellent improvement in results reflect the benefits of several
years of restructuring which are beginning to produce returns."
Sales for the quarter of $869.4 increased by 18 percent from $738.6 million
last year as all three operating groups reported increased sales. Earnings from
operations of $29.3 million increased by 165 percent from $11.1 million, before
unusual items, last year. The Meat Products Group and the Agribusiness Group
both reported increased earnings while Bakery Products Group earnings declined
from 1998. Net earnings of $10.8 million ($0.10 per share), compared to $1.5
million ($0.02 per share), before unusual items, in the prior year.
Meat Products Group sales of $527.5 million increased by 23 percent from $429.5
million last year. Earnings from operations increased to $17.8 million compared
to $1.5 million last year as all operations within the Group recorded improved
results. Maple Leaf Pork benefited from favourable commodity markets and
construction is proceeding on the Brandon, Manitoba hog processing plant with
completion anticipated in the fall of this year. Maple Leaf Consumer Foods
earnings improved as a result of increased volumes. Several new products were
launched during the quarter including Ready Crisp pre-cooked bacon and Top Dogs
nutritionally superior wieners. Maple Leaf Poultry recorded improved volumes
and margins, principally due to continuing strong growth of Maple Leaf Prime
branded chicken and improved operating efficiencies. The previously disclosed
joint venture agreement to process turkey with Cold Springs Farm Limited was
finalized on April 2, 1999, resulting in the closure of the Company's Walkerton
turkey facility and transfer of production to the new joint venture. Maple Leaf
Foods International recorded strong results due to strong demand from global
Bakery Products Group sales of $175.4 million increased of 12 percent from
$157.2 million last year. However, earnings from operations declined to $0.3
million from $2.4 million last year. Canada Bread Company, Limited recorded an
increase in sales largely due to the new A&P supply contract, however, the
start up costs of this contract are also reflected in the quarter. The
integration of Hamilton Bakery in Ontario was successfully completed in the
quarter. A new management team has been put in place at Canada Bread, and a six
point strategy has been developed and is aggressively being implemented to
restore profitability. In the United States, sales of core par-baked bread
products were up significantly, offset by the loss of some contracted private
label bagel business. Agribusiness Group sales of $166.6 million increased by
10 percent from $151.8 million last year, primarily due to increases in feed
and pet food sales. Operating earnings of $11.3 million increased by 57 percent
from $7.2 million last year as a result of the sales increases, partly offset
by continued losses from the sale of live hogs in Quebec. Construction on a new
mill tower in St. Mary's Ontario that will significantly increase feed capacity
in Shur-Gain's Ontario business has begun and will be completed late in 1999.
The Company has reached an agreement to sell Country Style Food Services Inc.,
its Franchising Operations, to a group including CAI Capital Partners and
Company II, L.P. and Country Style management in a transaction valued at $45
million. Closing is scheduled for May 28, 1999 and a gain on the transaction
will be recorded in the second quarter. The transaction is consistent with the
Company's Core 7 Strategy of focusing on core businesses and presents growth
opportunities for Country Style that can be more fully realized on a
Other income for the quarter of $0.4 million is lower than the $3.7 million
reported last year largely due to reduced earnings from associated companies
and the gain on sale of the MTC Animal Health business recorded in January
The Company has in place a process designed to minimize the effects of the Year
2000 issue on the Company. As at March 31, 1999 the assessment and remediation
phase related to the Company's internal computer systems was substantially
complete, and over 95 percent of the Company's internal systems are considered
to be Year 2000 ready or have contingency plans in place. 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 June 30, 1999 to
shareholders of record on June 11, 1999.
Mr. Michael McCain added: "We are very pleased that the results for the first
quarter, and we are confident the Company will have a good year."
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