Toronto-based Maple Leaf Foods Inc has announced an increase in sales for its Q4 and FY ended 31 December 2001.
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Sales for the Q4 increased 22% to C$1.30bn (US$0.81bn) reflecting top-line growth in all operating groups. One third of this increase related to operations that were owned throughout the year, while the remainder is due to acquisitions completed during the year. Earnings from operations for the Q4 of C$57.6m were up 121% from C$26.1m in 2000. Net earnings for the quarter increased by 96% to C$24.7m (C$0.24/share) compared to C$12.6m (C$0.12/share) in the prior year.
Sales for the year increased 21% to C$4.78bn. FY earnings from operations of C$157.5m increased 75%. Net earnings of C$57.4m (C$0.55/share) increased 56% from C$36.8m (C$0.34/share) in the prior year. Net earnings in 2000 included a C$12.9m (C$0.13/share) after-tax gain on a sale of short-term investments. Excluding this gain, earnings per share in 2001 of C$0.55 compares to C$0.21 in 2000.
Michael H. McCain, president & CEO, commented: “We are very pleased with our results for the fourth quarter and for 2001 as a whole, considering the many external issues we faced during the year. We have made continuous progress in each of our primary business groups and the management team believes we are entering 2002 with significant positive momentum.”
Meat Products Group
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By GlobalDataMeat Products Group sales for the quarter increased 17% to C$804.3m, after the inclusion of the results for the Winnipeg fresh pork facility, acquired in the Q1 of 2001. FY sales increased 27% to C$3.1bn compared to C$2.4bn in 2000. Earnings from operations for the quarter were C$23.1m compared to C$1.6m the prior year. Operating earnings of C$38.1m compared to a loss of C$11.2m in 2000.
The principal factor accounting for the significant increase in earnings was improved results at Maple Leaf Pork. Operational improvements were achieved at all of its facilities, and the Brandon, Manitoba facility contributed to operating earnings in the Q4.
In the rest of the group, although Consumer response to Maple Leaf Prime Naturally chicken, launched in the Q2, continues to be very positive, however, Maple Leaf Poultry results during the quarter were challenged by industry-wide raw material price increases, and rapid commodity poultry price declines through the fall of 2001. Maple Leaf Consumer Foods achieved significantly improved results over a year ago due to strong results from sales in both Canada and the US and Maple Leaf Foods International recorded improved results as the negative impact of the safeguard duties in Japan abated.
Bakery Products Group
Bakery Products Group sales increased 62% to C$267.8m after the inclusion of results for Multi-Marques, acquired at the beginning of the Q4, and strong sales in Canada and the US. FY sales increased 20% to C$783.6m from C$650.9m in 2000. Operating earnings for the quarter rose 140% to C$13.8m from C$5.8m, bringing annual operating earnings to C$37.9m, an increase of 85% over the prior year.
The increase in operating earnings for the quarter reflects continued improvements at Canada Bread and Maple Leaf Bakery in the United States, and contributions from Multi-Marques, the remaining 75% of which was acquired by Canada Bread on 12 October 2001.
The expansion to the Roanoke, Virginia bakery was substantially completed and began operations late in the fourth quarter. The commissioning process has been very smooth to date.
Agribusiness Group
Agribusiness Group sales of C$226m in the Q4 increased 4% from C$218.1m the previous year. FY sales increased to C$878.7m from C$845.8m in 2000. Operating earnings for the Q4 of C$20.7m were up 10% from C$18.8m in 2000, while FY operating earnings of C$81.5m compared to C$80.9m in the prior year.
The company’s Vertical Coordination pork and poultry value chain strategy contributed to the Agribusiness Group posting quarter-over-quarter gains in sales and operating earnings. Shur-Gain and Landmark Feed’s animal nutrition operations continue to record strong results, benefiting from the Vertical Coordination strategy. The Elite Swine hog production operation had solid results and continues to expand the Elite Swine Management system, in both Western Canada and Ontario. Rothsay Rendering reported improved earnings in the quarter due to declining natural gas prices and stronger commodity markets.
Other Information
Other income for the Q4 was C$2.1m compared to C$11.8m in the previous year. The primary component of other income in 2000 was real estate development earnings of C$10.7m, with no comparable earnings in 2001.
Interest expense for the Q4 of C$15m decreased from C$16.4m in 2000 due to lower short-term interest rates. FY interest expense of C$64.4m was up marginally from C$63.7m in 2000 due to higher average borrowing levels, being largely offset by lower short-term interest rates.
On 14 December 2001, the company completed a C$170m equity issue. Proceeds from the issue strengthened its balance sheet and better positions the company to continue to participate in industry consolidation opportunities.
Cash flow
The company’s cash flow from operations for the Q4 of C$163.3m was higher than in the previous year due principally to higher earnings, increases in the company’s accounts receivable securitization program and lower investment in working capital.
On 19 February 2002 the company declared a dividend of C$0.04 per share payable on 29 March 2002 to shareholders of record on 15 March 2002.
