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Maple Leaf Foods Reports Third Quarter Results

TORONTO, Ontario – Maple Leaf Foods
Inc. today reported financial results for the third quarter ended September 30,
2000. Mr. Michael McCain, President and Chief Executive Officer of Maple Leaf
Foods, said: “We are pleased that all three operating groups – Meat Products,
Bakery Products and Agribusiness – achieved their planned operating
improvements in the quarter. Operating losses at our Brandon pork facility are
trending downward, the profitability of our bakery operations continues to
grow, and our animal nutrition and hog production operations are demonstrating
strong growth and profitability.”

Financial Results

Sales for the third quarter of $ 1.1 billion
increased by 23% from $866 million last year. The increase in sales was largely
due to pork sales from the Brandon, Manitoba fresh pork facility and two
acquisitions, The Landmark Group and Hub Meat Packers. Year-to-date sales of
$2.9 billion were up 9 % from $2.6 billion last year. Earnings from

operations for the third quarter of $23.7 million was down from $35.7 million
last year. The Bakery Products Group and the Agribusiness Group both reported
increased earnings while the Meat Products Group reported a loss of $4 million,
principally due to losses of $12.5 million at the Brandon pork facility.
Year-to-date earnings from operations of $64.0 million was down from $102.1
million last year. Net earnings for the quarter, including a $12.9 million
($0.13 per share) after tax gain on the sale of some short-term investments,
were $15.7 million ($0.15 per share) compared to $20.3 million ($0.20 per
share) last year. Year-to-date net earnings were $24.2 million ($0.22 per
share) compared to $54.3 million ($0.54 per share) last year.

Meat Products Group

Meat Products Group sales for the third
quarter of $674 million increased by 29% from $524 million last year.
Year-to-date sales of $1.8 billion were up 10% from $1.6 billion last year.
Losses from operations for the third quarter of $4.0 million, including
operating losses of $12.5 million at the Brandon pork facility, compared to
earnings of $13.7 million last year. Year-to-date losses from operations of
$12.8 million compared to earnings of $48.9 million last year. Quarterly
start-up costs and operating losses this year at the Brandon pork facility have
been: $20.0 million in the first quarter ($18.4million of which was
capitalized); $18.6 million in the second quarter ($5.6 million of which was
capitalized); and $12.5 million in the third quarter (none of which was
capitalized).

The Brandon facility continues to perform
extremely well mechanically, and steady progress is being made in building the
size and skill base of its core employee group. First shift capacity
utilization is growing into the fourth quarter due, in part, to the successful
launch in the third quarter of our “Signature West” hog procurement program.

In addition to the Brandon operating losses,
Maple Leaf Pork’s results continued to be adversely affected by high live hog
prices and unusually low margins in the pork industry generally.

Maple Leaf Consumer Foods’ results improved
over last year due to improved sales mix, contributions from new products and
cost savings arising from the rationalization of manufacturing facilities.
Maple Leaf Poultry recorded lower results due to a short-term supply shortage
of live birds relative to growing demand, but Maple Leaf Prime chicken
and turkey product sales continued to show exceptional market growth. Maple
Leaf Foods International recorded lower results than last year as a result of
lower pork product volume available for sale to Asia from Maple Leaf Pork.

Bakery Products Group

Bakery Products Group sales for the third
quarter of $169 million were equal to third quarter sales last year.
Year-to-date sales of $486 million compared to $518 million last year. Earnings
from operations for the third quarter of $6.0 million were up 47% from

$4.1 million last year. Year-to-date
earnings from operations of $14.7 million were up from $6.2 million last year.

Canada Bread moved into its second round of
year-over-year earnings growth by reporting its fifth consecutive quarterly
increase in operating earnings, following improvements to its operations which
were implemented in 1999. Cost reduction and margin improvement momentum, and
renewed focus on investment in people, brands and new products are expected to
result in continued improvement in financial performance. In the United States,
sales of par-baked bread products once again grew significantly year-over-year.
With recent strong sales momentum, improving product mix and the outlook for
higher plant utilization rates, Maple Leaf Bakery is expected to begin to
record operating earnings.

Agribusiness Group

Agribusiness Group sales for the third
quarter of $220 million increased 27% from $173 million last year. Year-to-date
sales of $628 million were up 24% from $507 million last year. Earnings from
operations of $21.7 million were up 21% from $18.0 million last year.
Year-to-date earnings from operations of $62.1 million were up 32% from $47.0
million last year.

As in the second quarter, the sales and
operating earnings increases are attributable to strong results from
Shur-Gain’s animal nutrition operations, benefits from our vertical
co-ordination pork value chain strategy and the inclusion of the results of
Landmark Feeds and Elite Swine, acquired in the fourth quarter last year.

Other Information

Other income for the third quarter of $18.0
million compares to $9.6 million last year. During the quarter, short-term
investments were liquidated for a net gain before taxes of $17.2 million. 
Year-to-date other income of $22.7 million was up from $21.4 million last year.

Interest expense for the quarter of $17.7
million was up from $10.8 million last year. Year-to-date interest expense of
$47.3 million was up from $31.9 million last year . The increases are largely
due to higher borrowing levels resulting from the acquisitions of The Landmark
Group, in October 1999, and Hub Meat Packers, in May 2000, and higher
short-term interest rates.

The Company declared a dividend of $0.04 per
share payable on December 29, 2000 to shareholders of record on December 15,
2000.

“It has been a difficult year in terms of
financial results” said Mr. McCain. “The most significant adverse impact on our
financial results has been the start-up of the Brandon pork facility. The
remainder of our businesses are achieving significant operational gains and
strong, profitable growth. We remain excited by the future of the Brandon
facility. All the fundamentals for the operation are well positioned to supply
product into growing world demand for pork. We look forward to strong financial
returns on this investment.”


Q3 2000 Report (PDF File Size =

63.7KB)