Thursday, February 26, 2015

Maple Leaf posts another loss

Maple Leaf Foods Inc. posted another fourth-quarter and annual loss, but has finished a major overhaul of its meat-processing facilities and is positioned to increase sales.

The fourth-quarter loss was $13.7 million, considerably better than a year ago when the loss was $56 million. The annual loss was 75.5 million, down from $136.5 million a year ago.

Revenues increased by 6.1 per cent in the fourth quarter to $794 million, but only because of a significant price increase for its products because sales volume declined.

Annual revenues declined by 6.9 per cent to $3.2 billion.

The hog production and feed milling business in Manitoba improved significantly this year, posting a profit of $5.4 million compared with a loss of $10 million last year. Hog profits improved dramatically this year, but feed-milling margins declined.

The transition to a new meat-processing plant in Hamilton will soon be completed. Production at the Schneider plant in Kitchener ends today and the only remaining plant to be closed is in Toronto.

The Panet Road plant in Winnipeg closed during the fourth quarter.

President and chief executive officer Michael McCain says "we have completed what we set out to accomplish in 2007 and finished the year with new momentum."

The company has struggled to get the new equipment at Hamilton running properly and to get production up to targets.

But the North American climate for Canadian meat packers has improved significantly with the decline in the value of the Canadian dollar.

On the other hand, the margin between the Canadian and U.S. prices for pork, which is a major input cost for Maple Leaf, is poised to narrow because it seems almost certain that the U.S. will be forced to abandon its Country of Origin Labeling (COOL) regulations that have been depressing the price of Canadian hogs by about $1 billion a year.

That will be partially offset by an increase in the value of the hogs that are raised on farms owned by Maple Leaf.