October 29, 2008 / 1:03 PM / 10 years ago

UPDATE 3-Maple Leaf sinks to loss, sees more recall costs

* Reports C$12.9 mln loss on meat recall

* Further recall costs expected in 4th quarter

* CEO says time will mend consumer confidence (Adds analyst and company comments)

TORONTO, Oct 29 (Reuters) - Maple Leaf Foods Inc (MFI.TO) reported a third-quarter loss on Wednesday because of a costly recall of tainted meat, which the company said was now complete.

The company, one of Canada’s largest food processors, said it lost C$12.9 million ($10.6 million), or 10 Canadian cents a share, compared with a year-earlier profit of C$220.4 million, or C$1.67 a share.

Maple Leaf said the 2008 results included product recall and restructuring costs of 24 Canadian cents a share, mostly from the tainted meats incident in August.

As well, the 2007 results included a profit of C$217.7 million from the sale of its livestock feed business.

Contaminated deli meats from a Maple Leaf food processing plant in Toronto have been linked to at least 20 deaths. After an extensive investigation, the company said it believed two slicers at the plant had been harboring the listeria bacteria.

Chief Executive Michael McCain said the listeriosis outbreak cost Maple Leaf about C$33 million in the quarter for product recalls and sanitation, and that further costs were expected in the fourth quarter. He declined to provide exact numbers, however.

“We feel that we have an opportunity to fully recover our business, recognizing that it will take time, it will take hard work and it will take patience, and that is what we are setting out to do,” McCain told Reuters.

“They need time. We are continuing to focus on things that will endorse that consumer confidence.... We are seeing week-over-week improvement but exactly what the time is and slope of the curve and how long it takes is in the consumer hands and not ours.”

Excluding special items, profit rose to 13 Canadian cents a share from 6 Canadian cents, this came mostly on the back of steady results from Maple Leaf’s bakery business and a hefty performance by its agribusiness group.

Agribusiness, which includes swine production and animal by-products recycling, rebounded from a loss to end with a profit of C$12.3 million.

The results were “a big surprise to the upside,” said Octagon Capital analyst Robert Gibson, who, like other analysts, was unsure about what to expect from Maple Leaf during the quarter.

The company’s shares were up 36 Canadian cents, or 5 percent, at C$7.53 on the Toronto Stock Exchange.

“The businesses are doing much better. All-in-all it was a really good number,” Gibson said. ($1=$1.22 Canadian) (Reporting by Scott Anderson; editing by Rob Wilson)

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