Maple Leaf Foods Inc. reported its financial results for the second quarter ended June 30, 2013. Adjusted Operating Earnings for the second quarter was $22.8 million compared to $63.1 million last year. Year-to-date Adjusted Operating Earnings were $30.4 million compared $94.8 million last year. Net earnings for the second quarter was $nil, compared to $26.0 million last year. For the first six months, net loss was $14.7 million compared to net earnings of $20.2 million last year. Adjusted Earnings per Share was $0.02 compared to $0.23 last year. Year-to-date Adjusted Earnings per Share was a loss of $0.04 compared to $0.29 last year.
"Market conditions which affected first quarter results continued into the second quarter, although there was material improvement in important areas", said Michael H. McCain, president & CEO. "Hog production returns, global pork markets and volatile raw material markets all contributed to a material year-over-year earnings decline. This was compounded by the costs of transition and start-ups in our new prepared meat manufacturing and distribution network. These factors more than offset strong growth in prepared meats volumes from earlier in the year and solid improvement in the Bakery segment, which we expect will accelerate. Market conditions are expected to improve and our commercial fundamentals are good. Overall, we are satisfied with our strategic progress, although we are now at the peak of change and expect earnings volatility through this transition."
Maple Leaf Foods sales of $1,214.2 million for the second quarter declined 3.7% from last year, or 2.2% after adjusting for the impacts of divestitures and foreign exchange, due to lower volumes which were partly offset by higher pricing. For the first six months sales decreased 3.9% from the prior year to $2,327.1 million, or 2.3% after adjusting for divestitures and foreign exchange, due to the same factors.
Sales for the second quarter in the Protein Group declined 4.5% to $816.7 million from $855.5 million last year. For the first six months, sales decreased 5.2% to $1,561.1 million. The quarter and year-to-date declines were primarily driven by lower volumes and the divestiture of the Company's potato processing business, partly offset by higher pricing.
Adjusted Operating Earnings in the second quarter declined to a loss of $9.8 million compared to Adjusted Operating Earnings of $33.4 million last year, reflecting a combination of poor market conditions and higher near-term costs related to the implementation of its prepared meats strategy.
For the first six months, Adjusted Operating Earnings decreased to a loss of $14.8 million compared to Adjusted Operating Earnings of $66.7 million last year, due to similar factors noted above with the addition of lower prepared meats volumes in the first quarter of 2013.
Meat Products Group sales for the second quarter declined 3.2% to $751.3 million, or 1.4% after adjusting for the impact of divesting the Company's potato processing business and foreign exchange. This was the result of lower volumes in primary pork processing, partly offset by higher pricing in fresh and prepared meats. For the first six months, sales declined 4.9% or 2.8% after adjusting for the impact of divesting the company's potato processing business and foreign exchange, due to similar factors as well as lower prepared meats volumes in the first quarter.
Earnings in primary pork processing continued to be negatively affected by the devaluation of the Japanese Yen, which was partly offset by improving primary processing spreads and higher margins in other export markets. Earnings in fresh poultry were affected by higher feed and related live bird costs, partly offset by higher volumes, pricing and increased sales into higher margin channels. The sale of the company's potato processing business reduced Adjusted Operating Earnings by approximately $4 million in the second quarter compared to last year.
Sales in the Agribusiness Group for the second quarter were $65.4 million, 17.7% lower than last year due to a decline in biodiesel volumes, which was partly offset by higher pricing. Sales for the first six months declined 8.3% to $132.9 million due to similar factors.
In July the company sold its turkey agricultural operations for gross proceeds of $48.2 million. The assets and liabilities associated with the turkey agricultural operations are classified as assets held for sale as at June 30, 2013.
Source: Maple Leaf Foods