May 2, 2012 / 12:27 PM / 5 years ago

CORRECTED-UPDATE 3-Maple Leaf Foods profit falls, shares dive

* Q1 EPS nil vs year-earlier 8 Canadian cents

* Revenue C$1.16 bln v. Street view C$1.17 bln

By Rod Nickel

May 2 (Reuters) - Canadian food processor Maple Leaf Foods Inc reported a lower quarterly profit on Wednesday, widely missing Street expectations and pulling its shares down as much as 7 percent.

Weak fresh bakery sales were the main reason for the lower results, and are an industry-wide problem, said Chief Executive Michael McCain. The company said lower bakery volumes partly offset the benefit of price increases the company implemented last year.

The profit drop caught investors by surprise and Maple Leaf shares fell to a one-month low in early trading.

"We're going to have to get a lot of color on what happened in the bakery," said Robert Gibson, an analyst at Octagon Capital. "Seems to me, people are eating as much bread as they used to."

Maple Leaf, whose brands include Dempster's bread and Schneider's meats, closed two Toronto-area bakeries during the quarter as it consolidated production at a new bakery, Canada's largest, in Hamilton, Ontario, which opened last autumn.

The company's bakery is called Canada Bread Co Ltd, of which it owns 90 percent. Canada Bread said Wednesday that it earned a quarterly profit after a loss in the year-before quarter, when it incurred restructuring costs.

Maple Leaf's net earnings for first quarter, ended March 31, fell to C$800,000 ($808,000), or nil per share, from C$10.5 million, or 8 Canadian cents, the year before.

The company incurred C$20.4 million in pretax costs related to a $560-million multi-year plan to close some meat plants and modernize others, as well as closures of a poultry plant and several bakeries.

A strong Canadian dollar and high raw meat and wheat costs have been persistent obstacles for Maple Leaf.

The Canadian dollar was weaker during the quarter, boosting the sales value of pork exports, but price increases for Maple Leaf meat products were not sufficient to offset higher raw material and inflationary costs, the company said.

Adjusted earnings per share slipped to 11 Canadian cents from 18 Canadian cents a year earlier.

Sales rose 1 percent to C$1.16 billion.

Analysts, on average, had expected Maple Leaf to earn 17 Canadian cents a share on sales of C$1.17 billion, according to Thomson Reuters I/B/E/S.

Sales in the meat products group, Maple Leaf's biggest segment, rose modestly, but eased in the bakery group.

The company's shares fell 6.5 percent, or 84 Canadian cents, to C$12.08 in early trading on the Toronto Stock Exchange.

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