Maple Leaf reports Q2 results; Strong bakery and agribusiness results; Meats results expected to improve
Toronto, Ontario – July 26, 2000….Maple Leaf Foods Inc. (TSE:MFI) today reported its results for the quarter ended June 30, 2000.
Sales for the second quarter of $993 million compared to $896 million last year. The increase in sales was largely due to additional sales from the new Brandon, Manitoba fresh pork facility and the inclusion of results for The Landmark Group and Hub Meat Packers. Earnings from operations for the second quarter of $21.2 million compared to $37.1 million last year. The Bakery Products Group and the Agribusiness Group both reported increased earnings while the Meat Products Group reported a loss due to operating losses of $13.1 million at the Brandon pork facility. Net earnings for the quarter were $3.0 million ($0.02 per share), compared to $23.3 million ($0.24 per share) in the prior year.
"We have laid a solid foundation for very exciting profitable growth in our Meat Products Group. The short term impact of our new investments, as reflected in current financial results, only serve to strengthen our conviction in and determination to realize our vision. We are also very pleased with the progress and results being achieved by the Bakery Products Group and the Agribusiness Group", said Mr. Michael H. McCain, President & Chief Executive Officer of Maple Leaf Foods.
Meat Products Group
Meat Products Group sales for the second quarter of $617 million were up from $556 million last year. Year-to-date sales of $1.09 billion compare to $1.08 billion last year. Losses from operations for the second quarter were $6.9 million compared to earnings of $17.4 million last year. Year-to-date losses from operations were $8.8 million compared to earnings of $35.2 million last year.
Full operating results for the Brandon pork facility are reflected in the Company’s consolidated statement of earnings as of May 1, 2000. Prior to that, net pre-operating costs were capitalized. Included in second quarter results were sales of $59.8 million and operating losses of $13.1 million. Net pre-operating costs during the quarter of $5.6 million ($24.0 million year-to-date) were capitalized. We anticipate improving operating performance at the Brandon facility through the balance of the year, and remain confident about the facility’s future potential.
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. The acquisition of Hub Meat Packers in Atlantic Canada was completed on May 1, 2000.
Maple Leaf Consumer Foods’ results improved over last year. Several new programs and products contributed to the improvement, including continued success and extension of the Maple Leaf Top Dogs line of nutritionally enhanced wieners. New Maple Leaf Top Dogs Singles were successfully launched during the quarter. Maple Leaf Poultry recorded strong results as Maple Leaf Prime chicken and turkey product sales continued to grow. Maple Leaf Foods International recorded lower results than last year as a result of the impact on its pork supplies due to the operating difficulties experienced by Maple Leaf Pork.
Bakery Products Group
Bakery Products Group sales of $163 million compared to $173 million last year. Year-to-date sales of $317 million compared to $348 million last year. The majority of the declines in sales are attributable to the inclusion in 1999 of the results of the Franchise Operations, which were sold at the end of the second quarter last year. Earnings from operations for the second quarter of $5.6 million were up from $1.9 million last year. Year-to-date earnings from operations of $8.7 million were up from $2.2 million last year.
Canada Bread Company, Limited recorded a strong increase in operating earnings, and its fourth consecutive quarterly increase in operating earnings, reflecting the early benefits of the intensive turnaround effort over the last 18 months. Operating performance improved and sales and marketing efforts were substantially enhanced. During the quarter, Dempster’s Original With Fiber, a new white bread nutritionally enhanced with fiber, was successfully launched. We expect to see continued improvement in quarterly operating results at Canada Bread.
In the United States, sales of par-baked bread products once again grew year-over-year, and Maple Leaf Bakery operated close to break-even. We are convinced more than ever that the investments which have been made to position Maple Leaf Bakeries as the leading frozen par-baked bread company in the United States will yield excellent returns in the future.
Agribusiness Group sales of $214 million were up 28% from $167 million last year. Year-to-date sales of $407 million were up from $334 million last year. Earnings from operations of $22.5 million were up from $17.7 million last year. Year-to-date earnings from operations of $40.5 million were up 40% from $29.0 million last year.
The sales and operating earnings increases are attributable to inclusion of the results of Landmark Feeds and Elite Swine, acquired in the fourth quarter last year, strong results from Shur-Gain's animal feed and fish feed operations and benefits from vertical coordination. Vertical coordination contributed to increased feed volumes and resulted in higher earnings from hog production investments. During the quarter, an agreement was reached to acquire Western Animal Nutrition's feed mill in Abbotsford, British Columbia. The addition of this facility provides Maple Leaf Foods with a truly national presence, with operations in every province. The outlook for the Agribusiness Group remains very positive.
Other income for the quarter of $1.6 million was the same as last year. Year-to-date other income of $4.8 million was up from $2.0 million last year, due principally to sales of real estate development lots in the first quarter.
Interest expense for the quarter of $16.4 million was up from $10.3 million last year. Year-to-date interest expense of $29.6 million was up from $21.1 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, on May 1, 2000, and higher short-term interest rates. During the quarter, the Company completed a private placement of $225 million, 10-year notes to a group of Canadian and United States investors.
The Company declared a dividend of $0.04 per share payable on September 29, 2000 to shareholders of record on September 15, 2000.
|Q2 2000 Report (PDF File Size = 291K)|
FOR FURTHER INFORMATION PLEASE CONTACT:
Chief Financial Officer
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