Maple Leaf Foods recorded slightly lower bakery sales for the third quarter but its CEO said there were signs of improvement to the challenging bread market.
Canada’s largest bakery and processed meats producer posted profits of C$32.6m ($32.69m) for the third quarter (Q3), up C$100,000 ($100,291) from Q2 but down from strong C$43m ($43.12m) earnings for Q3 2011.
“While the challenges of consumer bread demand and pork market conditions continue, we are seeing signs of improvement in both,” Michael H. McCain, president and CEO of Maple Leaf Foods, said.
“We are achieving earnings growth in our consumer facing prepared meats and bakery businesses, and managing higher input costs through responsible pricing,” McCain said.
Bakery dip despite hedging efforts
Sales for the bakery business dipped from last quarter with C$401.3m ($402.4m) in sales compared to C$407.4m ($408.5m) for Q2 and were down 3.8% down on last year.
The drop in sales was primarily related to lower volume in the fresh bakery business, the firm said in its report.
“Fresh bakery volumes were consistent with the second quarter of 2012, but lower than last year, reflecting industry volume declines. Despite the lower volumes, margins expanded in the fresh bakery business, principally through cost management.” it said.
Despite the drop, it said that results had benefited from positive hedging during the quarter. “Although the company continues to experience inflationary costs and protected increases in flour and dairy costs that will require offsetting price increases,” it added.
McCain had acknowledged the challenging commodities market back in August when the firm posted its Q2 results. See HERE .
The CEO had said that the firm was ready to tackle the “challenging commodity markets” and would hedge inflation.