Maple Leaf Foods saw underlying profits almost halve during the first half of 2008 thanks to soaring grain and fuel costs.
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The Canada-based bakery-to-meat producer today (24 July) posted earnings from continuing operations of C$51.9m (US$51.4m) – against C$102.5m a year earlier.
The figure excluded costs related to the restructuring programme Maple Leaf embarked on in order to boost profitability. Restructuring costs stood at C$19.3m during the first half of 2008.
Sales were down, though not as heavily as earnings. Revenue dipped 2.9% to C$2.6bn.
President and CEO Michael McCain said Maple Leaf “fully expected” a “difficult” first half of the year due to food inflation and volatility in commodity prices.
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By GlobalData“We are focused on persevering through these unprecedented market conditions, maintaining our focus on executing the structural changes we have committed to and passing on price increases to offset the effects of commodity inflation,” McCain said. “While the first half has been pressured, we believe the second half of 2008 will show a substantial recovery as markets stabilize and the early benefits of restructuring are realised.”
The restructuring, which involves consolidating its pork processing operations and focusing more on higher-margin businesses, is expected to be completed by the end of 2009.
Underlying earnings from Maple Leaf’s meat products business fell 16% as higher feed costs and a strong Canadian dollar ate into margins.
Underlying profits from the company’s bakery business slumped almost 58% as price increases failed to offset higher wheat costs and Maple Leaf upped its marketing expenditure.
