CANADA: Maple Leaf CEO upbeat after 2013 losses
Maple Leaf shares closed up in Toronto
Maple Leaf Foods CEO Michael McCain is looking to 2014 with optimism after the Canadian food group saw profits fall in 2013 amid the cost of revamping its plant network, higher input costs and lower sales.
The company has spent the last three years modernising its production, as well as offloading assets deemed no longer core to the business, including most recently the deal to sell Canada Bread to Grupo Bimbo.
Maple Leaf booked a net loss from continuing operations of C$58.5m (US$52.56m) for the 12 months to 30 December. In 2012, Maple Leaf generated a net income of C$41.9m. Restructuring costs of C$73.5m hit Maple Leaf's bottom line.
However, Maple Leaf said its meat products group made a loss of C$86.2m before restructuring costs were included in the results. Higher input costs were not fully offset by pricing, while SG&A costs were up on 2012. The disposal of Maple Leaf's potato processing arm, included in the division, also hit earnings.
Sales were down amid lower fresh pork and prepared meats volumes. Group revenue dropped 3.2% to C$4.41bn.
Nevertheless, McCain was optimistic about the company's prospects.
"For three years we have been building a new plant network, which entered a peak period in December of 2013 as we began commissioning Maple Leaf's single largest facility in Hamilton," McCain said. "Now the focus changes. From here on, our job is to get the new plants running at peak performance, transfer production from older high cost plants to new low cost plants, and close the older plants down. Once completed, later this year, we expect to start seeing significant structural margin expansion. We also expect more normal market conditions to unfold in 2014."
He added: "Combined with our plans to pay down debt, invest in the business and return excess capital to shareholders, we believe Maple Leaf will be very well positioned to drive profitable growth and deliver strong shareholder value."
Shares in Maple Leaf closed up 2.77% at C$16.33.
Click here for the full statement from Maple Leaf.
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