Maple Leaf Foods reported net earnings of $43 million in the third quarter ending September 30, 2011, compared to a second-quarter loss of $19.9 million, according to the company's latest financial report.
Adjusted operating earnings in the meat products group for the third quarter were $20.8 million, compared to $19.5 million in 2010, as margin expansion driven by price increases, improved mix and cost reduction in prepared meats was largely offset by weaker primary processing markets. Prepared meats earnings and margins increased as a result of price increases implemented earlier in the year to offset rising input costs, improved sales product mix and early benefits from the company's value creation plan. These benefits were partly offset by lower sales volumes and higher selling, general and administrative expenses.
Earnings in primary pork processing operations declined slightly, as the benefits of strong exports and better product sales mix were offset by compression in primary pork processor margins in North America and the unfavorable impact of a stronger Canadian dollar. Earnings from poultry processing operations declined significantly, driven by a continued rise in live birds costs as a result of increased feed prices.
On October 19 Maple Leaf announced its intention to invest approximately $560 million in its prepared meats manufacturing and distribution network as part of its broader value creation plan. Over the next three years the company will close six plants, consolidating production into four scale facilities, and close four distribution centers, consolidating operations at its existing distribution center in Saskatoon and into a new facility in Ontario. These changes, and the implementation of world-class technologies, are expected to significantly enhance productivity and contribute to continued margin expansion in this business.