Maple Leaf Foods Inc. reported its financial results for the fourth quarter and fiscal year ended December 31, 2011. Net earnings for the fourth quarter decreased to $9.2 million, which included $32.2 million of pre-tax restructuring charges, from $30.6 million in the fourth quarter last year. However, net earnings for the year increased to $87.3 million, which included $79.8 million of pre-tax restructuring charges, from $35.6 million last year
"We are very pleased with our results for the year and we remain on track to deliver our earnings and margin growth for 2012 through 2015," said Michael H. McCain, president and CEO. "We realized strong earnings growth for the year in our protein operations, which contributed to a 40% rise in our adjusted earnings per share. However, we experienced a challenging fourth quarter as a result of unseasonably strong raw material costs which impacted continued margin growth in prepared meats. We also experienced short term higher operating costs in our bakery business. These factors, combined with lower pork and poultry processing margins from year ago highs, contributed to lower relative performance in the fourth quarter. We are now actively passing through pricing to help mitigate these challenges and we remain committed to executing our value creation initiatives."
Sales for the fourth quarter increased 3% to $1,245.3 million compared to $1,212.0 million last year. After adjusting for the impacts of divestitures and foreign exchange, sales increased by 5%, primarily as a result of higher selling prices. For the full year, sales were $4,893.6 million, down 2% from $4,968.1 million in 2010. After adjusting for divestitures and foreign exchange, this represented an increase of 5%.
Adjusted Operating Earnings for the fourth quarter were $57.4 million compared to $69.9 million last year, as weaker pork and poultry margins and unexpectedly high meat input costs during the quarter led to lower earnings in the Protein Group. For the full year, Adjusted Operating Earnings increased 21%, to $259.0 million compared to $214.5 million last year, reflecting strong results in the Protein Group.
Adjusted Earnings per Share were $0.21 in the quarter, compared to $0.27 last year. For the year, Adjusted Earnings per Share were $1.01, which included $12.2 million ($0.09 per share) of tax adjustments related to a prior acquisition, compared to $0.73 last year.
For the fourth quarter, net earnings were $9.2 million ($0.06 basic earnings per share) compared to $30.6 million ($0.21 basic earnings per share) last year. Net earnings included $32.2 million ($0.17 per share) of pre-tax costs related to restructuring activities (2010: $19.7 million, or $0.11 per share). For the full year, net earnings were $87.3 million ($0.59 basic earnings per share) compared to $35.6 million ($0.22 basic earnings per share) last year. Net earnings included $79.8 million ($0.41 per share) of pre-tax costs related to restructuring activities (2010: $81.1 million).
Meat Products Group sales for the fourth quarter increased 3% to $781.8 million from $762.6 million in the fourth quarter last year. After adjusting for the impact of the sale of the Company's Ontario primary pork processing operation and a weaker Canadian dollar, sales increased by 5% due to higher market prices in fresh pork and price increases and improved sales mix in prepared meats. These benefits were partly offset by lower sales volumes in primary processing, while prepared meats sales volumes were consistent with last year.
Adjusted Operating Earnings in the Meat Products Group for the fourth quarter decreased by 27% to $27.5 million, compared to $37.7 million last year, mostly due to lower poultry and pork primary processing margins. Earnings from poultry primary processing operations were significantly lower due to higher live bird costs that peaked during the fourth quarter of 2011, and were not recovered by higher meat values.
Although still at reasonable levels, primary pork processing packer margins in North America were lower than the very significant levels reached in the fourth quarter of 2010. Lower processor margins were partly offset by stronger pork export markets and improved product sales mix.
Fourth quarter earnings in prepared meats were consistent with last year, although the trend of increasing earnings in this business was interrupted in the fourth quarter. While selling prices are seasonally reduced as meat costs typically decline towards year end, fresh meat input costs continued to be unexpectedly high, which impacted margins. Despite the rise in raw material costs compared to last year, the prepared meats business achieved significant earnings growth in 2011, benefiting from increased selling prices, new product innovation and improved sales mix, and early benefits from ongoing simplification of product lines and network consolidation. In the first quarter of 2012, management intends to implement price increases to address higher raw material costs.
For the full year, Adjusted Operating Earnings in the Meat Products Group increased 18% to $96.0 million compared to $81.3 million last year, driven by better sales mix and the early benefits of transformation initiatives in the prepared meats business, as well as strong pork processing results earlier in the year.
Source: Maple Leaf Foods Inc.