Maple Leaf Foods Inc, the Canadian food processor, released disappointing first quarter results today, showing a tumble both from 2011’s first quarter earnings as well as analyst expectations.
Its first quarter adjusted earnings per share hit 11 cents, a drop from the company’s earnings last year of 18 cents and the Bloomberg analysts’ prediction of 16.8 cents.
Maple Leaf’s net earnings also took a tumble, falling to $800,000 compared with $10.5 million last year as the company’s adjusted operated earnings dropped 20% to $40.5 million.
The company named an abrupt decline in bakery product sales as well as rising food production and materials costs for both its bakery and meat products categories. Maple Leaf’s brands include Dempster's bread and Schneider's meats as well as a company bakery called Canada Bread Co Ltd.
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According to CEO Michael McCain, slow bakery sales are an industry-wide problem that the company is well aware of and taking aggressive steps to remedy. Also during the year, Maple Leaf Foods closed down two Toronto-area bakeries in a consolidation effort to cut costs in the midst of rising wheat and raw meat prices.
The news overall isn’t that bad, as Maple Leaf’s first-quarter sales rose a marginal 1% to $1,160.8 million compared with $1,147.9 million last year due to higher prices. Sales in Meat Products, Protein and Agrifood Foods groups were strong this quarter while the bakery sales decreased.
“While the bakery business had a slow start, we expect to reach our EBITDA margin target run rate later this year,” McCain said in a statement.