Reuters — Canadian food processor Maple Leaf Foods, which has been replacing production facilities and setting up a new distribution system, reported a quarterly loss that it blamed on the “tremendous” costs of the restructuring.
Maple Leaf’s multi-year program to revamp meat operations to boost profits and better compete with U.S. rivals such as Tyson Foods is expected to end next year. [Related story]
The company’s margins on hog production have been weak for several years due to high feed costs.
“We are in a peak phase of executing our prepared meats network strategy, which added tremendous costs and inefficiency in the quarter as we ramped up five new facilities while continuing to operate our parallel older plants,” CEO Michael McCain said in a statement Thursday.
McCain said the restructuring was causing “short-term earnings volatility.” Weak protein markets also weighed on the company’s results in the quarter ended Dec. 31, he said.
Maple Leaf’s restructuring and other related costs jumped 19 per cent to $15.3 million in the quarter, while selling, general and administrative expenses rose 11 per cent.
The company sold its Canada Bread unit to Mexico’s Grupo Bimbo earlier this month for $1.83 billion in cash, to focus on its meats business. [Related story]
Maple Leaf reported a net loss from continuing operations of $14.4 million, or 13 cents per share, for the quarter compared with a net profit of $41 million, or 27 cents per share, a year earlier.
Sales fell two per cent to $1.11 billion. — Reuters