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Maple Leaf profit rises despite higher prices

Fourth-quarter profits at meat processor Maple Leaf Foods Inc. rose sharply even as the company contended with higher raw material prices and took a hit to revenues after the sale of an Ontario pork plant.

The Toronto-based company, which is in the midst of a contentious restructuring, said Thursday its net earnings were $30.2-million, up 38 per cent from a year-earlier $21.9-million. That amounted to 21 cents per share, up from 16 cents per share in the same period a year before.

Sales fell 9 per cent to $1.21-billion due to the effect of the sale of Maple Leaf's Burlington, Ont., pork operation and an extra week in the prior-year period.

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Stripping out the impact of one-time items, Maple Leaf said it earned $71.4-million in the quarter or 27 cents per share. That was exactly in line with a consensus forecast from analysts polled by Thomson Reuters of 27 cents per share on $1.33-billion in revenues.

"Maple Leaf Foods delivered strong earnings growth in the fourth quarter, despite a sharp increase in raw material prices" president and CEO Michael McCain said in a statement.

"These results reflect the benefits of cost reductions and price increases intended to help us keep pace with global food inflation, and some early benefits from the initial execution of our strategic plan."

Earlier this month, the company agreed to bring the CEO of major shareholder West Face Capital onto its board of directors in a move to satisfy complaints about some of the directors' independence from the McCain family.

The decision comes after West Face, which owns 11.4 per cent of Maple Leaf Foods, publicly complained that the board is too big and alleged some directors are too closely involved on a personal level with the McCain family members who hold a controlling vote.

Maple Leaf has been closing several plants around Canada as part of a $1.3-billion restructuring plan designed to reduce costs and improve profit as the company grapples with weaker sales, rising raw material prices and the high Canadian dollar, which makes its exports more expensive to foreign buyers.

It has already shut down several factories and laid off hundreds of workers as part of a plan to consolidate its 24 processed meat operations.

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The company said it will open a new large-scale prepared meats plant, with construction expected to start in 2012.

Maple Leaf has previously announced a similar strategy in its bakery business that will consolidate three Toronto-area bakeries into a massive plant in Hamilton.

Like all food processors, Maple Leaf has been squeezed by rising commodity prices - everything from flour used to bake bread to sugar for pies and pastries and pork, beef and chicken for cold cuts and hot dogs.

Maple Leaf, which produces the Maple Leaf and Burns brands and also is Canada's largest baker through its Canada Bread subsidiary, employs about 23,500 people at operations across Canada, the U.S., the U.K. and Asia.

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