Maple Leaf Foods pins 4Q $21.7 million loss on costs of building new plants
Canadian meat, poultry and food processor reports net loss of $12.3 million
Canadian meat, poultry and food processor Maple Leaf Foods reported a net loss of $21.7 million for the fourth quarter of fiscal year 2013, and a yearly loss of $12.3 million. Those losses were a sharp contrast to the Maple Leaf Foods earnings of $70 million in the fourth quarter of 2012 and $172 million for fiscal year 2012.
The company on February 27 reported its financial results for the two periods ending December 31, 2013.
A major contributing factor to the Maple Leaf Foods losses was that the company is opening new, more efficient plants in its prepared meats segment while still running the old ones.
"We are in a peak phase of executing our prepared meats network strategy, which added tremendous costs and inefficiency in the quarter as we ramped up five new facilities while continuing to operate our parallel older plants. As expected, this is causing short-term earnings volatility, which was compounded by weak protein markets," said Michael H. McCain, president and CEO of Maple Leaf Foods.
"For three years we have been building a new plant network, which entered a peak period in December of 2013 as we began commissioning Maple Leaf's single largest facility in Hamilton (Ontario)," continued McCain. "Now the focus changes. From here on, our job is to get the new plants running at peak performance, transfer production from older high cost plants to new low cost plants, and close the older plants down. Once completed, later this year, we expect to start seeing significant structural margin expansion. We also expect more normal market conditions to unfold in 2014. Combined with our plans to pay down debt, invest in the business and return excess capital to shareholders, we believe Maple Leaf will be very well positioned to drive profitable growth and deliver strong shareholder value."
The Maple Leaf Foods Meat Products Group, which includes value-added fresh pork, poultry and turkey products sold to retail, foodservice, industrial and convenience channels, as well as value-added prepared meats, lunch kits, protein snacks, experienced a fourth-quarter loss of $42.6 million, compared to an earnings, also of $42.6 million in the fourth quarter of 2012. The Meats Products Group posted an $86.2 million loss in fiscal year 2013, compared to earnings of $98.4 million for fiscal year 2012.
Helping Maple Leaf Foods offset its 2013 losses from new plant construction was the sale of the Maple Leaf Foods rendering business Rothsay, and pasta business Olivieri.