February 28, 2012 / 1:42 PM / 6 years ago

Maple Leaf Foods profit falls on higher costs

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.

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

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

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