Maple Leaf Foods loss, sales disappoint

Wed Jul 31, 2013 9:52am EDT
 
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canadian food processor Maple Leaf Foods (MFI.TO: Quote) reported a disappointing quarterly loss on Wednesday, hurt by weak returns on raising pigs.

Shares fell 3.6 percent or 55 Canadian cents to C$14.95 in early trading in Toronto.

North American hog farmers have been hard-pressed to survive losses in the past year, due to at-times soaring costs of corn and wheat tied to last year's U.S. drought, and weak pig prices. Maple Leaf and its privately held Canadian rival Olymel, each bought large corporate hog farms to secure future supplies.

"They've got a lot more pigs there that are losing money," said Robert Gibson, analyst at Octagon Capital.

Maple Leaf Chief Executive Michael McCain cited hog production returns as one of the key reasons for the company's year-over-year decline. The weak results follow a disappointing first quarter, when the company also posted a surprising loss tied to high feed costs and lower meat sales.

Net earnings for the second quarter fell to nil, or a loss of 2 Canadian cents a share, from a profit of C$26 million, or 17 Canadian cents, a year before. Sales of C$1.214 billion were down 3.7 percent.

Maple Leaf's protein group, which includes both its meat products and agribusiness units, posted a C$9.8 million adjusted operating loss in the quarter, down from year ago adjusted operating earnings of C$33.4 million. Adjusted operating earnings are a non-IFRS (International Financial Reporting Standards) measure used by Maple Leaf.

Its bakery group was a bright spot, with adjusted operating earnings rising nearly 5 percent year over year to C$32.7 million.   Continued...