Maple Leaf reports strong 2011 earnings despite weak Q4

By Melodie Michel

- Last updated on GMT

Related tags Meat Livestock Pork Poultry

Canadian manufacturer Maple Leaf Foods has announced a 21% growth in 2011 adjusted operated earnings, reaching $259m despite an 18% drop in the fourth quarter.

The company said the growth was largely due to a strong yearly performance in the meat sector, although lower margins affected Q4 results. Maple Leaf president and CEO Michael H McCain said: “We are very pleased with our results for the year and we remain on track to deliver our earnings and margin growth for 2012 through 2015.

“We realised strong earnings growth for the year in our protein operations, which contributed to a 40% rise in our adjusted earnings per share. However, we experienced a challenging fourth quarter as a result of unseasonably strong raw material costs, which impacted continued margin growth in prepared meats.

“(...) These factors, combined with lower pork and poultry processing margins from year-ago highs, contributed to lower relative performance in the fourth quarter. We are now actively passing through pricing to help mitigate these challenges and we remain committed to executing our value creation initiatives.”

Sales in the meat product group increased by 3% to $781.8m in Q4 2011, due to higher prices in fresh pork and prepared meats. However, adjusted operated earnings for the same period dropped by 27%, mainly because of lower pork and poultry processing margins.

“Earnings from poultry primary processing operations were significantly lower, due to higher live bird costs that peaked during the fourth quarter of 2011, and were not recovered by higher meat values. Although still at reasonable levels, primary pork processing packer margins in North America were lower than the very significant levels reached in (...) 2010. Lower processor margins were partly offset by stronger pork export markets and improved product sales mix,”​ said the company.

Full-year adjusted operated earnings in the meat products group went up 18% to $96m, boosted by a good sales mix and strong pork results early in the year.

High raw meat prices hit margins in the prepared meats segment, despite consistent sales volumes. The company intends to increase prices in Q1 2012 to reflect the rise in raw material costs.

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