The company reported operating earnings of C$76.3m in the third quarter ended 30 September 2012, up from C$73.3m in the same period last year. Net earnings fell 24% to $32.6m from C$43m in Q3 2011, partly due to a C$13m drop in the value of the company’s “biological assets”, which include live pigs, chickens and eggs.
Sales in the Meat Group decreased 2% to C$761m as a result of lower foodservice sales in prepared meats, but operating profit in the group increased 39% to C$28.8m as a result of strong earnings in prepared meats and fresh poultry.
Maple Leaf Foods chief executive officer Michael McCain said that margin expansion in the prepared meats business was driven by “branded sales growth and innovation, as well as operating cost reductions”, while fresh poultry growth was the result of “strong sales in our leading Maple Leaf Prime chicken brand driven by, we think, great innovation and marketing, and some improvement in the underlying poultry processor margin.”
He added that earnings from pork processing were level with last year, with Maple Leaf mitigating the impact of weaker industry margins in North America with “higher pricing and margins in international exports”.
Sales in the Agribusiness Group increased 13% to C$76m as a result of higher volume toll feed sales resulting from an agreement with a third party. However, McCain said that while this increased capacity utilisation at the company’s feed mill, it did not have an impact on earnings.
In fact, operational earnings in the Agribusiness Group fell 31% to C$17.6m “due to weaker market conditions”. Hog production earnings were hit by “higher feed prices and lower market prices for hogs”, said McCain, while earnings in the by-products recycling business also fell.
“This, in combination with increased operating expenses, reduced earnings, particularly when compared to the strong results in Q3 last year,” he added.
Looking to the future, McCain forecast significant increases in meat costs in 2013. "We will address this challenge through responsible pricing actions in the marketplace," he said.