Maple Leaf Foods profit jumps as charges drop

Tue Feb 26, 2013 11:32am EST
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TORONTO (Reuters) - Maple Leaf Foods Inc MFI.TO, one of Canada's biggest bakers and meat processors, reported a jump in quarterly profit on Tuesday as restructuring charges and other costs fell, and said it expects volatile earnings in the first half of 2013 as it raises prices.

The Toronto-based company, best known for its Maple Leaf and Schneiders brand meats and Dempster's bread, has been hurt by soaring grain prices caused by a severe drought in the United States, which drove up the cost of raising hogs and its baking costs.

"The effects of food inflation driven by the North American droughts of 2012 will be felt mostly in the first half of 2013. As a result, we expect some short-term volatility in our earnings as we pass those cost increases on in the marketplace," Chief Executive Michael McCain said in a statement.

"Beyond this, our strategic initiatives will accelerate in 2013 and contribute to continued margin growth."

The company, which is closing older meat plants and modernizing others under a multi-year plan to boost earnings, said net profit for the fourth quarter rose to C$56.8 million ($55.36 million), or 39 Canadian cents per basic share, from C$9.2 million, or 6 Canadian cents a share, a year earlier.

Diluted earnings per share jumped to 38 Canadian cents from 6 Canadian cents.

Restructuring costs fell to C$12.8 million, or 7 Canadian cents a share, in the period ended December 31, from C$32.2 million, or 17 Canadian cents a share, in the same quarter last year.

Revenue dropped 3 percent to C$1.2 billion.

Maple Leaf shares rose 3 Canadian cents to C$13.21 on the Toronto Stock Exchange on Tuesday morning. Year-to-date, the stock has climbed 10 percent.   Continued...

A sign for the Maple Leaf food processing plant is seen in Toronto August 21, 2008. REUTERS/Mark Blinch