TORONTO (Reuters) - Maple Leaf Foods Inc MFI.TO reported lower earnings on Tuesday as high costs hurt the profitability of its prepared meats and baked goods business.
The Canadian food processor said it is now raising prices to reflect the higher than expected costs.
“We experienced a challenging fourth quarter as a result of unseasonably strong raw material costs which impacted continued margin growth in prepared meats,” said Chief Executive Michael McCain in a statement. “We also experienced short-term higher operating costs in our bakery business.”
A strong Canadian dollar and high raw meat costs have been persistent obstacles for Maple Lead, which is closing older meat plants and modernizing others as part of a multi-year plan to boost earnings.
Maple Leaf said it will close a bakery in Walsall, Britain, early in 2012, incurring about C$12.7 million in restructuring costs.
Net earnings for the quarter ended December 31 dropped to C$9.2 million ($9.2 million), or 6 Canadian cents a share, from C$30.6 million, or 21 Canadian cents, a year earlier.
Adjusted for the impact of restructuring, earnings per share fell to 21 Canadian cents a share from 27 Canadian cents. Analysts, on average, had expected earnings of 26 cents.
Revenue rose 3 percent to C$1.25 billion, compared with an average analyst forecast of C$1.20 billion.
($1 = $1.00 Canadian)
Reporting By Allison Martell