Maple Leaf Foods losses continue as restructuring expenses climb in Q3

TORONTO – Maple Leaf Foods says the cost of closing down some of its older plants, including one in New Brunswick, and shifting production to a new facility in Hamilton, Ont., ate into its profits in the latest quarter.

The Toronto-based meat processor reported a net loss of $26.7 million or 19 cents per share in the three-months ended Sept. 30. That compared with a loss of $24.5 million or 18 cents per share in the third quarter of last year.

On an adjusted basis, there was an improvement year-over-year with a loss of 13 cents per share compared with 19 cents per share a year earlier.

The third quarter’s net loss included $14.3 million or seven cents per share of expenses related to restructuring, up from $11.4 million or six cents per share a year earlier.

In September, Maple Leaf announced that it was shutting down its meat processing plant in Moncton, N.B., as part the company’s restructuring announced last April.

The company had operated the 48-year-old Moncton plant since 2000 and the closure affected 100 employees. The production from the plant was transferred to higher-efficiency facilities in Winnipeg, Saskatoon and Hamilton, Ont.

Maple Leaf still has to close three more plants, which is expected to happen sometime in 2015. Once the restructuring efforts are complete, it will operate 13 meat plants instead of 22, and two distribution centres instead of 19.

President and CEO Michael McCain said the company increased prices in its prepared meats business in the second quarter after running into higher raw material costs, a move that impacted sales.

But McCain said he was confident consumers will return to buying more prepared meats over the next two quarters despite the increase.

The company had $830 million of sales from continuing operations in the latest quarter. That was up from $757.8 million of sales from continuing operations in the third quarter of 2013, but down from $1.2 billion if sales from discontinued operations such as Canada Bread were included.

Maple Leaf had sold its Canada Bread bakery subsidiary and other operations last May to Mexico’s Grupo Bimbo.

The company credited the improved revenue higher sale of pork and higher pricing. The figure was slightly ahead of the $814 million anticipated by analysts but the adjusted loss was greater than expected, according to figures compiled by Thomson Reuters.

McCain said the company is sees growth for its business through its Halal foods products, snacks and health and nutrition categories.

Maple Leaf Foods is Canada’s leading producer of packaged meats for consumers with brands sold under its own banner as well as Schneiders and Mina. It employs about 12,000 people and exports to more than 20 markets, including the U.S. and Asia.

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