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Maple Leaf Reports 2003 First Quarter Financial Results

Toronto, Ontario – Maple Leaf Foods Inc. (TSE:MFI) today reported its financial results for the first quarter ended March 31, 2003.

Sales for the first quarter of $1.3 billion compared to $1.2 billion for the same period last year, while earnings from operations before unusual items of $33.2 million decreased from $41.7 million last year. Earnings from operations were impacted by a $7.4 million special charge ($4.8 million after tax) related to plant closures and operational restructuring in the Bakery Products Group. A gain of $4.7 million pre-tax ($3.1 million after-tax) is included in the Company’s Meat Products Group results, related to the wind-up of a defined benefit pension plan for hourly employees. Profitability declined in the Company’s Protein Value Chain operations, which is comprised of the Meat Products Group and the Agribusiness Group, as a result of the oversupply of meat proteins in North America, low hog prices and high feed costs, and the effects of operational changes underway in Atlantic Canada. Strong performance in the Company’s Bakery Products Group and its value-added and processed meat business helped to offset the earnings impact of difficult hog and fresh meat markets.

Net earnings for the first quarter of $ 6.0 million ($0.04 per share) decreased from $16.9 million ($0.14 per share) in 2002. After adjusting for the restructuring charge in the Bakery Products Group and the pension gain in the Meat Products Group, earnings per share of $0.05 compared to $0.14 last year.

“Our first quarter results reflect the continuing impact of a surplus in beef, pork and poultry products across North America, although we continued to outperform most of the industry,” said Michael McCain, President and Chief Executive Officer. "From a longer-term perspective, over the past seven years we have achieved a 13% compound annual growth rate in our earnings per share, a solid performance record. The fundamentals of our Company are very strong, and I fully expect that when these markets correct themselves, as they always have, that we are well positioned to drive profitable growth.”

Other income for the first quarter of $0.3 million compared to $1.6 million for the same period last year, reflecting lower earnings from gain on sale of investments. Interest expense for the quarter of $16.2 million increased from $13.4 million for the prior year due to higher borrowing costs as a result of the long-term debt financing completed in December 2002. Cash flow from operating activities for the first quarter was a use of funds of $53.3 million compared to a use of funds of $7.4 million last year, reflecting an increased investment in working capital and lower earnings in the first quarter of 2003. Capital expenditures of $20.3 million compared to $18.6 million last year.

During the quarter, the Company repurchased for cancellation 122,200 common shares pursuant to a normal course issuer bid at an average price of $9.81 per share.

Meat Products Group (branded value-added prepared meat products; fresh, frozen and branded value-added pork products; fresh, frozen and branded value-added chicken and turkey products; and global food marketing, distribution and trading)

Meat Product Group sales for the first quarter were $721 million compared to $737 million last year. Earnings from operations of $6.3 million (including the $4.7 million pension plan wind-up gain), compared to $12.5 million last year. Maple Leaf Pork increased the volume of hogs processed by 10% quarter-over quarter, however, dollar sales value declined as a result of lower fresh meat prices due to the continued oversupply of protein in the market. A significant reduction of the breeding herd and a forecasted decline in protein production in North America suggest improved pork prices later in 2003.

Earnings in the Meat Products Group were also adversely affected by approximately $4 million due to operational changes underway in Atlantic Canada, a process that will be completed later in the year. Markets for Maple Leaf Prime Naturally chicken improved in the quarter. Year-over-year poultry production declines in North America and the expected resumption of U.S. exports to Russia are forecasted to strengthen poultry prices. Maple Leaf Foods International had solid results in the quarter, as did Maple Leaf Consumer Foods, which achieved strong market share growth and margin gains in its retail branded business.

Agribusiness Group (research, development and supply of quality livestock nutrition products and services; pet food; swine production; and animal by-products recycling)

Agribusiness Group sales for the first quarter were $223 million, up slightly from $221 million last year, while operating earnings of $13.7 million decreased from $17.3 million for the same period last year. Shur-Gain and Landmark Feeds animal nutrition operations and pet food business recorded solid quarter-over-quarter improvements in profitability. The decline in profitability in the Group was largely the result of a significant decline in hog prices and an increase in feed costs on a quarter-over-quarter basis. Hog prices showed early signs of strengthening in the quarter and are forecasted to continue to improve.

Bakery Products Group (comprised of Maple Leaf’s 73.3% ownership in Canada Bread Company, Ltd., a leading producer of fresh and frozen par-baked bakery products, and fresh pasta and sauces)

Bakery Products Group sales for the first quarter increased 16% to $308 million compared to $265 million for the same period last year. The increase in sales was due to the contribution from recent acquisitions and internal growth, driven by increased branded product sales. Operating earnings before unusual items in the Bakery Products Group of $13.3 million increased 11% compared to $12.0 million last year, reflecting improved sales and synergies from the integration of acquisitions, plant consolidations, transportation and distribution restructuring and other cost reductions. Rising input prices experienced over the last few quarters have largely been recovered through price increases in Canada, while offsetting price increases are still underway in the United States. The Company is adding another par-baked line at its bakery plant in Roanoke, Virginia, to meet the requirements of a new exclusive 10-year contract with a major North American food service chain. During the quarter, Canada Bread recorded a $7.4 million charge ($4.8 million net of tax) related to the closure of its bakery in London, Ontario and other operational restructuring.

On January 30, 2003 Maple Leaf completed the purchase of four million common shares from Canada Bread for $26.50 per share in a private placement. This share purchase increased Maple Leaf’s ownership of Canada Bread to 73.3% from 68.3%.

The Company declared a dividend of $0.04 per share payable on June 30, 2003 to shareholders of record on June 13, 2003.

Maple Leaf Foods Inc. is a leading Canadian food processing company committed to delivering quality food products to consumers around the world. Headquartered in Toronto, Canada, the Company employs approximately 18,000 people at its operations across Canada, and in the United States, Europe and Asia. Maple Leaf Foods Inc. reported sales of $5.1 billion in 2002.
A conference call will be held at 2:30 p.m. (Toronto time) on April 30, 2003 to review Maple Leaf Foods’ financial results for the first quarter ended March 31, 2003. To participate in the call, please dial in to 1-800-298-3006. For those unable to participate playback will be made available an hour after the event at 1-800-558-5253 passcode #21140584.

An Investor Presentation related to the Company’s first quarter financial results is also available at (click on Investor Zone and then Investor Communications). A live webcast of the Maple Leaf Foods Annual General Meeting, which is being held today, will be available commencing at 11:00 a.m. at A replay of the webcast will also be available at the shortly after the Annual General Meeting.

This release contains forward-looking statements and information, which may include statements concerning the company's outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. These risks and uncertainties include availability and prices of livestock, raw materials and supplies, livestock costs, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, adverse results from ongoing litigation and actions of domestic and foreign governments. Maple Leaf assumes no obligation to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein do not materialize. Refer to the Company’s annual report, management information circular, annual information form and other filings with the Ontario Securities Commission and Toronto Stock Exchange for further information on risks and uncertainties that could cause actual results to differ materially from forward-looking statements.

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