Maple Leaf Foods Reports Strong Operating Performance
Toronto, Ontario-- Maple Leaf Foods Inc. (TSE:MFI) today announced its results for the second quarter ended June 30, 2001.
Sales for the second quarter increased 23% to over $1.2 billion from $993 million last year, reflecting strong top-line growth in all our operating groups. Earnings from operations for the second quarter rose 84% to $38.9 million from $21.2 million also resulting from increased earnings in all three groups. Net earnings for the quarter were $12.8 million or $0.12 per share compared to $3.0 million or $0.02 per share last year, bringing earnings for the six months to $22.5 million or $0.21 per share compared to $8.5 million or $0.07 per share last year.
"We are encouraged by the strong operating gains in each of our groups. Our long-term strategy and vision have begun to materialize into bottom-line results. We are optimistic that the solid foundation of world-class assets, strategies and talent now in place will drive the company forward" said Mr. Michael H. McCain, President & Chief Executive Officer of Maple Leaf Foods.
Meat Products Group
Meat Products Group sales increased 34% to $827 million as Maple Leaf Pork sales nearly doubled quarter over quarter reflecting the inclusion of a full quarter of sales from the Brandon, Manitoba pork facility, as well as sales from the Winnipeg fresh pork facility acquired in the first quarter of this year. Year-to-date sales of over $1.5 billion compared to $1.1 billion last year. Operating earnings for the quarter were $9.1 million compared to a loss of $6.9 million last year, largely reflecting an improvement in overall fresh pork operations and strong performance from the international trading operations. Six month operating earnings of $19.5 million compared to a loss of $8.8 million the year before.
The Brandon pork facility accounted for a significant portion of the improvement in Maple Leaf Pork’s operating earnings. The facility is not yet operating at breakeven, due in part to seasonally high hog prices which put pressure on margins; however, substantial operating improvements continue to be achieved. We are still targeting for Brandon to contribute to profits by the end of the year. Maple Leaf Foods International posted strong results due to increased global sales, while Maple Leaf Consumer Foods and Maple Leaf Poultry reported satisfactory results.
In July, Maple Leaf Poultry launched Maple Leaf Prime Naturally, Canada’s first 100% vegetable-grain fed, air-chilled branded chicken. Researchers at Shur-Gain developed Nutri-Prime branded feed containing a premium blend of vegetable grains and a proprietary blend of vitamins and minerals with no animal by-products or animal fat. Maple Leaf Prime Naturally is one example of Maple Leaf Foods’ commitment to innovation in response to emerging consumer preference, and we are highly optimistic for its ongoing success in the marketplace.
Bakery Products Group
Bakery Products Group sales increased to $173.9 million from $163.0 million last year. Year-to-date sales increased to $337.5 million from $316.5 million last year. Operating earnings for the quarter rose 29% to $7.2 million from $5.6 million, bringing year-to-date operating earnings to $13.5 million, an increase of 54% over last year. The majority of this increase is attributed to the strong growth in par-baked sales reported by Maple Leaf Bakery U.S.A. Canada Bread continues to benefit from increased profitability on sales to Maple Leaf Bakery.
In June, Maple Leaf Bakery announced an investment of US $11 million to expand its Roanoke, Virginia facility. This expansion further strengthens its leading position in the par-baked market as well as in premium frozen and specialty baked goods. Maple Leaf Bakery is the leader in the growing U.S. par-baked business as an increasing number of in-store bakeries switch to the convenience and economics of par-baked products over more costly traditional methods.
Canada Bread’s acquisition of 75% of the outstanding shares of Multi-Marques announced earlier this year remains subject to regulatory approval.
Agribusiness Group sales of $223.6 million increased from $213.5 million last year. Year-to-date sales increased to $425.5 million from $407.5 million last year. Earnings from operations for the second quarter were $22.6 million compared to $22.5 million last year, while year-to-date operating earnings of $36.8 million declined from $40.5 million year over year.
Both Shur-Gain and Landmark Feeds reported continued strong results during the quarter, generated by world-class research and product development capabilities as well as synergies of scale. This helped to offset the lower operating results at Rothsay Rendering which continues to be adversely impacted by high energy prices. The Company continues to benefit from its Vertical Coordination value chain strategy which provides a managed hedge to the cyclicality of the pork industry.
Other income for the quarter was $1.0 million compared to $1.6 million last year. Interest expense for the quarter of $17.1 million increased from $16.4 million, while year-to-date interest expense of $33.4 million was up from $29.6 million due largely to higher borrowing levels.
The company declared a dividend of $0.04 per share payable on September 28, 2001 to shareholders of record on September 14, 2001.
"We are making steady progress towards achieving our long-term goals, and remain dedicated to our vision of creating lasting value for our shareholders through innovation and product development," said Michael McCain. We are focused on building leadership capacity in our company, and disciplined operations, to produce tangible business results. We are very optimistic about the long term prospects of our company."
Maple Leaf Foods Inc. is a leading global food processing company. Headquartered in Toronto, Canada, the Company employs more than 13,000 people at its operations across Canada and in the United States, Europe and Asia. Maple Leaf Foods reported sales of $3.9 billion in 2000.
A conference call will be held at 10:00 a.m. (Toronto time) on July 27, 2001 to review Maple Leaf Foods’ financial results for the second quarter ended June 30, 2001. The call will be hosted by Michael H. McCain, President & Chief Executive Officer; Tom P. Muir, Chief Financial Officer and Michael H. Vels, Executive Vice-President, Finance.
To participate in the call, please dial in to 1-888-433-1657. For those unable to attend, the call will be taped and posted for one month. You may access the tape by dialing 1-800-558-5253, passcode 19344433 or review the transcript on our website.
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