Maple Leaf expects meat recall to cost $19 million

TORONTO Mon Aug 25, 2008 11:07am EDT

A sign for the Maple Leaf food processing plant is seen in Toronto August 21, 2008. REUTERS/Mark Blinch

A sign for the Maple Leaf food processing plant is seen in Toronto August 21, 2008.

Credit: Reuters/Mark Blinch

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TORONTO (Reuters) - Maple Leaf Foods Inc said on Sunday it expects a direct cost of about C$20 million ($19 million) from a recall of contaminated meat linked to an outbreak of food poisoning that has killed at least four people in Canada.

Health authorities said on Saturday genetic tests had determined that a Toronto plant operated by Maple Leaf was the source of meat contaminated with listeria bacteria.

The company, one of Canada's biggest meat processors, had been considered the likely source and had already recalled about 20 products that were manufactured at the plant in June.

That recall was extended on the weekend to include all 220 or so products manufactured at the plant, making it one of the biggest food recalls ever in Canada.

So far, 21 cases of listeriosis have been confirmed in four provinces, and the same strain has been detected in the four people who have died.

A further 30 cases are under review, but health officials said on Sunday that no other plants were under investigation.

The Toronto plant, which has been closed for sanitization, is one of 23 operated by Maple Leaf.

The company said the C$20 million pre-tax cost forecast was based mainly on estimates of the cost of reimbursement for returned products and for factory sanitization. The costs will be included in results for the third quarter ending September.

"The company may incur future costs related to increased advertising and other consumer communications and may experience reduced sales for a period of time," it said.

Maple Leaf Chief Executive Michael McCain told a news conference on Sunday he expected the Toronto plant to reopen on Tuesday after completion of sanitization procedures.

"It's clear that the confidence in Maple Leaf and our brand has been shaken and I feel very badly about that..." he said.

"(But) I do believe that if we fundamentally do the right thing ... if we act in the interest of public health, over time, I hope, that we can rebuild that confidence."

Listeriosis is particularly dangerous for pregnant women, the elderly, infants, and people with weak immune systems. Three deaths were in Ontario and one was in British Columbia.

Health authorities said it was likely more cases would be discovered as the onset of symptoms of listeriosis can occur up to 70 days after contaminated food is consumed.

Maple Leaf is already being hurt by soaring grain and fuel costs. The company reported a second-quarter loss of C$9.35 million, compared with a loss of C$1.7 million a year earlier, on sales of C$1.4 billion.

Maple Leaf shares dropped 4.6 percent to C$9.80 on Friday.

(Reporting by Ted Kerr; Editing by Braden Reddall)

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