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Maple Leaf sees price hikes to offset drought costs

File photo of Maple Leaf Foods plant in Kitchener, Ont.

Tim Fraser/The Globe and Mail

Maple Leaf Foods Inc. expects to raise prices this year due to cost increases caused by the droughts last year, chief executive Michael McCain said Tuesday as the company reported a fourth-quarter profit of $54.6-million.

"The effects of food inflation driven by the North American droughts of 2012 will be felt mostly in the first half of 2013," McCain said in a statement.

"As a result, we expect some short-term volatility in our earnings as we pass those cost increases on in the marketplace."

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The company said its profit amounted to 38 cents per diluted share for the three months ended Dec. 31, up from $8.4-million or six cents per diluted share in the same 2011 quarter.

Maple Leaf's revenue fell 3.3 per cent to $1.2-billion from $1.24-billion.

Adjusted earnings were 38 cents per share in the quarter, compared with 21 cents a year ago.

Revenue was slightly below the average estimate compiled by Thomson Reuters, but Maple Leaf's profit beat estimates of 31 cents per share of adjusted earnings and 27 cents per share of net income.

For the full year, the company earned $115.3-million or 81 cents per diluted share on sales of $4.86-billion, compared with $82.1-million or 58 cents per diluted share on sales of $4.89-billion.

McCain said the results "reflect steady, ongoing progress in realizing earnings growth."

"The challenging market conditions in primary pork processing margins and consumer bread demand were significant headwinds for the year," McCain said.

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Maple Leaf Foods Inc., with some 20,000 employees at operations in Canada, the United States, Europe and Asia is a leading value-added meat, meals and bakery company.

Shares in the company were down three cents at $13.15 in trading on the Toronto Stock Exchange on Tuesday.

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