Maple Leaf Foods profit jumps as charges drop
TORONTO (Reuters) - Maple Leaf Foods Inc (MFI.TO), one of Canada's biggest bakers and meat processors, reported a jump in quarterly profit on Tuesday as restructuring charges and other costs fell, and said it expects volatile earnings in the first half of 2013 as it raises prices.
The Toronto-based company, best known for its Maple Leaf and Schneiders brand meats and Dempster's bread, has been hurt by soaring grain prices caused by a severe drought in the United States, which drove up the cost of raising hogs and its baking costs.
"The effects of food inflation driven by the North American droughts of 2012 will be felt mostly in the first half of 2013. As a result, we expect some short-term volatility in our earnings as we pass those cost increases on in the marketplace," Chief Executive Michael McCain said in a statement.
"Beyond this, our strategic initiatives will accelerate in 2013 and contribute to continued margin growth."
The company, which is closing older meat plants and modernizing others under a multi-year plan to boost earnings, said net profit for the fourth quarter rose to C$56.8 million ($55.36 million), or 39 Canadian cents per basic share, from C$9.2 million, or 6 Canadian cents a share, a year earlier.
Diluted earnings per share jumped to 38 Canadian cents from 6 Canadian cents.
Restructuring costs fell to C$12.8 million, or 7 Canadian cents a share, in the period ended December 31, from C$32.2 million, or 17 Canadian cents a share, in the same quarter last year.
Revenue dropped 3 percent to C$1.2 billion.
Maple Leaf shares rose 3 Canadian cents to C$13.21 on the Toronto Stock Exchange on Tuesday morning. Year-to-date, the stock has climbed 10 percent.
Octagon Capital Corp analyst Bob Gibson said the quarterly results showed strong margins, but otherwise had few surprises.
On an adjusted basis, operating earnings rose to C$91.3 million from C$57.4 million last year, reflecting improvements in the its meat and bakery groups, the company said.
Adjusted earnings per share rose to 38 Canadian cents from 21 Canadian cents a year earlier.
Sales in the company's meat products unit fell 5 percent to C$740.8 million, while adjusted operating earnings soared 75 percent to C$48 million. Price increases and a more profitable sales mix helped boost earnings, along with lower costs from a reduced line of products, Maple Leaf said.
Bakery group sales fell 2.4 percent to C$390.6 million, but adjusted operating profit nearly doubled to C$31.4 million. The company has cut costs by closing older bakeries and moving production to a new facility in Hamilton, Ontario.
(Reporting by Susan Taylor in Toronto and Shounak Dasgupta in Bangalore; Editing by Joyjeet Das, Grant McCool, Theodore d'Afflisio and Peter Galloway)