February 21, 2008 / 2:32 PM / in 10 years

Maple Leaf losses grow as wheat prices soar

WINNIPEG, Manitoba (Reuters) - Maple Leaf Foods Inc (MFI.TO) saw its losses grow in the fourth quarter because of soaring wheat prices, the strong Canadian dollar, and restructuring charges, the Canadian meat processor and baker said on Thursday.

Maple Leaf reported a loss of C$22.1 million ($21.9 million), or 17 Canadian cents per share in the quarter, compared with a year-earlier loss of C$11.6 million, or 9 Canadian cents per share.

Sales fell 6 percent to C$1.3 billion as the company got out of some businesses and was hurt by the strong Canadian currency in others.

Shrinking world grain stocks and booming demand have pushed prices for most grains, including wheat, to record levels.

Those rising costs have pinched margins for food companies as well as for the livestock sector and meat processors.

Maple Leaf has faced aggressive costs to get out of the money-losing pork export business, including C$71.9 million in the fourth quarter.

It increased its estimate of total costs for its three-year restructuring plans to C$275 million to C$325 million (C$90 million to C$110 million in cash), up from C$165 million to C$215 million (C$50 million to C$75 million in cash.)

Maple Leaf said it recently completed the sale of hog barns in Ontario and Alberta.

After the first quarter, Maple Leaf said it will produce about 750,000 hogs per year, accounting for 20 percent of its processing volume, down from 1.3 million hogs in 2007.

Maple Leaf said it had bigger bakery sales in the United Kingdom despite higher wheat and dairy costs.

It has hiked prices to offset most of its rising costs.

“We may face some short-term volatility depending on the precise timing of matching price action with cost increases, given the magnitude of the changes,” Chief Executive Michael McCain said in a release.

Maple Leaf also recently bought Aliments Martel, a Quebec-based sandwich maker and baker, and said it plans to expand the pre-packaged sandwich business.

($1=$1.01 Canadian)

Reporting by Roberta Rampton and John McCrank; Editing by Scott Anderson

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