Maple Leaf Foods reported its financial results for the third quarter, ending Sept. 30, 2015. The company recorded sales from continuing operations of $818.8 million for the third quarter of 2015, a decrease of 0.2% from last year, or 2.2% after adjusting for the impact of foreign exchange. The decrease was primarily due to lower sales in the Agribusiness Group. Sales from continuing operations for the first nine months of 2015 increased 2.4% to $2,419.8 million, or 0.9% after adjusting for the impact of foreign exchange, due to higher sales in the Meat Products Group.
Adjusted Operating Earnings for the third quarter increased to $29.8 million compared to a loss of $19.8 million last year primarily as a result of improved margins and favorable market conditions in the Meat Products Group. For the first nine months of 2015, Adjusted Operating Earnings improved to $62.0 million compared to a loss of $61.8 million last year, due to factors similar to those noted above.
"We continued to build on a consecutive trend of quarter-over-quarter growth in Adjusted EBITDA margin, delivering 7.1% in the third quarter compared to 6.0% last quarter and a significant turnaround from 0.5% last year," said Michael McCain, President and CEO. "We are making meaningful progress on eliminating inefficiencies driven by the ramp-up of our new facilities, though not at the pace we had hoped for. We estimate these contributed over 320 basis points of margin in the quarter. Delivering on our strategic margin goal of consistent double digits will be achieved through reaching stable end-state production in our new network, which we expect will extend into 2016. Along with efficiency gains, we are launching a number of exciting initiatives, including a strong platform for more sustainable meat production, to deliver ongoing profitable growth."
Sales in the Meat Products Group for the third quarter was $814.8 million, consistent with last year, and a decrease of 2.0% after adjusting for the weaker Canadian dollar. Lower selling prices for fresh pork and a slight decline in prepared meats volume were offset by increased volume in fresh pork and a favorable sales mix in fresh poultry.
For the first nine months of 2015, sales increased 2.7% to $2,408.5 million, or 1.1% after adjusting for the weaker Canadian dollar, due to increased volume in fresh pork, a favourable sales mix in fresh poultry and increased pricing in prepared meats, which was implemented during the second quarter of 2014 in response to higher raw material costs. This was partially offset by lower selling prices for fresh pork.
Adjusted Operating Earnings for the third quarter increased to $28.3 million compared to a loss of $18.2 million last year. Earnings in prepared meats increased as a result of improved margins from lower operating and raw material costs. Earnings in fresh pork increased as a result of improved pork processing margins and higher margins for export and Canadian retail sales, which were partially offset by lower by-product values. The improvement in pork processing margins was driven by an increase in the cutout, which was offset by lower margins in prepared meats, largely as a result of a material spike in pork belly costs. This benefit in fresh pork was mostly offset by increased input costs in prepared meats. Earnings in fresh poultry increased as a result of improved poultry processing margins and increased branded poultry earnings.
For the first nine months of 2015, Adjusted Operating Earnings increased to $53.8 million compared to a loss of $61.3 million last year, due to similar factors noted above.
Source: Maple Leaf Foods