Canadian meat, agribusiness and bakery products group Maple Leaf Foods has reported a drop in sales for the second quarter to the end of June from C$1.6bn (US$1.4bn) to C$1.5bn.

The company attributed the drop primarily to lower commodity prices of export products. Sales in the six-month period were down by 5% at C$2.9bn.

Earnings for the second quarter fell from C$78.7m to C$60.4m, while earnings for the first half were down from C$139.8m to C$112.2m. Year-to-date earnings from operations in 2005 exclude C$13.2m (C$8.8m after tax) in restructuring costs incurred in the first quarter. The company said it felt this was the most appropriate basis on which to evaluate operating results, as restructuring costs are not representative of continuing operations.

Net earnings for the quarter declined to C$21.2m (C$0.17 per share) from C$33.2m (C$0.26 per share) in the second quarter last year. Six-month net earnings were C$38.5m (C$0.30 per share) against C$54.3m (C$0.43 per share) before restructuring costs last year. Including restructuring costs, net earnings for the first six months of 2005 were C$46.0m (C$0.36 per share).

"Currency challenges and global protein market conditions pressured our financial performance in the quarter," said Maple Leaf's president and CEO. "While we fared better in these difficult markets than our peers in North America, the impact of currency, combined with these market conditions, pressured our margins in both hog production and primary processing. We are taking several long-term actions to offset these impacts.

"As previously discussed, we are moving forward with major mid-term initiatives to achieve our long-term EPS and RONA targets, including realigning our protein value chain operations, investing in value-added processing and new product innovation, and implementing significant manufacturing optimisation and cost reduction initiatives. We anticipate that results for the second half of the year will be impacted by restructuring costs related to these actions. We will also execute strategic acquisitions to broaden our sales mix and expand our global operations."