Sales of chicken products helped Maple Leaf Foods experience increased adjusted operating earnings for fiscal year 2012, as well as the fourth quarter, according to the company's latest report. During a quarterly conference call with investors on February 26, Maple Leaf Foods President and CEO Michael H. McCain reported a 58.9 percent increase in adjusted operating earnings to $91.3 million for the quarter, and an 8.1 percent increase to $280 million for the year.
The company’s meat products group saw a 5.3 percent decline for the final quarter of 2012 from the fourth quarter of 2011. However, the adjusted operating earnings increased 75.2 percent to 48.1 million, compared to $27.5 million a year ago. This was driven by stronger earnings growth in the prepared meats and fresh poultry businesses, which was partly offset by lower earnings in the primary pork processing operations. Sales of higher value products, such as the Maple Leaf Prime chicken brand, combined with an improved sales mix in higher value channels contributed to higher earnings in the fresh poultry operations.
“We are continuing to enhance our product mix,” said McCain. “Our chicken business has gone extremely well. In fact, the underlying improvements are even better because we had some head winds from our weaker industry margins in pork processing.”
Maple Leaf is continuing efforts to improve profits from its poultry products. The company is in the midst of a plan for simplification of prepared meats, which focuses on higher volume and more profitable products. The next phase of simplification includes value-added chicken , boxed meats and lunch kits categories, which McCain said will drive further benefits in 2013. Revamped Prime Chicken frozen entrees have so far done well. “Our early results in that initiative indicate a very positive response from our consumers,” said McCain. "They like the packaging. They like the flavor offerings.”
While the company is moving forward with plans to further improve profitability, they are still cautious of some of the costs involved. “The effects of food inflation driven by the North American drought of 2012 will be felt mostly in the first half of 2013," said McCain. "As a result, we expect some short-term volatility in our earnings as we pass those cost increases on in the marketplace. Beyond this, our strategic initiatives will accelerate in 2013 and contribute to continued margin growth."
