Media Centre

Maple Leaf Reports Q1 Results - Positive Benefits from Vertical Coordination Bakery Results Continue to Improve

Toronto, Ontario - May 3, 2000….Maple Leaf Foods Inc. (TSE:MFI) today reported its results for the quarter ended March 31, 2000.

Sales for the quarter of $818.3 million compared to $869.4 million last year. The Meat Products Group and the Bakery Products Group reported lower sales, due in part to the impact of an extra week in the first quarter of 1999. In addition, sales from the Brandon pork facility are not included in sales for the quarter. The Agribusiness Group reported increased sales, largely due to the inclusion of sales for the Landmark Group. Earnings from operations of $18.2 million compared to $29.3 million last year. The Bakery Products Group and the Agribusiness Group both reported increased earnings while the Meat Products Group earnings declined from 1999. Net earnings of $5.5 million ($0.05 per share), compared to $10.8 million ($0.10 per share) in the prior year.

"This has certainly been a challenging quarter of implementation against our primary business strategies", said Mr. Michael H. McCain, President & Chief Executive Officer of Maple Leaf Foods, "compounded by the cyclical highs of the hog market. However, we have much to be pleased about, including achieving some important milestones in our pork business, achieving financial benefits from our vertical coordination business model, and seeing continued operational and financial improvements in our bakery operations. We are highly confident in the long term positioning of our company, as our strategies continue to unfold."

Meat Products Group

Meat Product Group sales of $470.8 million compared to $527.5 million last year. Sales of $70.7 million and start-up losses of $18.5 million for the Brandon pork facility are not included in the statement of earnings for the quarter. On a comparable basis, sales increased quarter-over-quarter. The Group recorded a loss from operations of $1.9 million compared to earnings from operations of $17.8 million last year.

Maple Leaf Pork was adversely impacted by high live hog prices, up 50% over those in the first quarter last year, by the absence of contribution from the Winnipeg pork facility which was closed last November, and by the organizational stress related to the start-up of the Brandon facility which came on line in late 1999. Maple Leaf Pork achieved several strategic operational milestones during the quarter. Inspite of the start-up losses, we are extremely pleased with the start-up of the Brandon facility. The Brandon, Manitoba and Burlington, Ontario facilities became the only two pork plants in the world to be approved for export of pork to China. The first shipments to China were made in late April. Maple Leaf Pork also began importing live hogs from the United States for processing in the Burlington facility in April . These are the first hogs from the U.S. processed in Canada in over 60 years. The importation was made possible as a result of recent changes to the protocol for importing live hogs from the United States. Opportunities to import hogs from the U.S. for processing in the Brandon facility will also be pursued, in response to the large number of Canadian hogs that have historically been shipped south for processing in the U.S.

Maple Leaf Consumer Foods' results were lower than anticipated due to margin pressure from higher meat costs and some inefficiencies experienced during the recently completed manufacturing restructuring which began in late 1999. Maple Leaf Poultry continued to improve market distribution and market share of Maple Leaf Prime chicken and turkey products. Maple Leaf Foods International recorded satisfactory results.

Bakery Products Group

Bakery Product Group sales of $153.5 million compared to $175.4 million last year. The decline is largely a result of the sale of Franchise Operations at the end of the second quarter last year and the effect of an extra week in the first quarter of 1999. Earnings from operations of $3.1 million increased from $0.3 million last year. Canada Bread Company, Limited continued to make operational and financial progress as a result of aggressive implementation of its six-point turnaround strategy. In the United States, sales of core par-baked bread products continued to grow strongly, with quarter-over-quarter sales up 15%. By the end of the first quarter, Maple Leaf Bakery was operating close to break even as a result of improved manufacturing performance, cost reduction initiatives and increased retail sales.

Agribusiness Group

Agribusiness Group sales of $194.0 million increased by 16% from $166.6 million last year. Operating earnings of $17.0 million increased by 50% from $11.3 million last year. The sales and operating earnings increases include the results of Landmark Feeds and Elite Swine which were acquired in the fourth quarter of 1999. The Agribusiness Group's results also benefited from our vertical coordination business model, balancing the cyclical low margins being experienced in pork markets due to high hog costs.

Other income for the quarter of $4.2 million compared to $0.4 million reported last year. The increase is largely due to increased earnings from associated companies, including Elite Swine's hog production related investments, and profits from sales of real estate development lots.

Subsequent to the end of the quarter, the Company completed a private placement of $225 million, 10-year notes to a group of Canadian and United States investors, and the acquisition of Hub Meat Packers in Atlantic Canada closed on May 1, 2000.

The Company declared a dividend of $0.04 per share payable on June 30, 2000 to shareholders of record on June 16, 2000.

Q1 2000 Report (PDF File Size = 63K)

Tom Muir
Chief Financial Officer
(416) 926-2050

More news releases and speeches