Food processor Maple Leaf Foods Inc. saw its first-quarter profit plunge to $800,000, down sharply from $10.5-million as the company booked charges related to its ongoing restructuring and struggled with weaker pork and bakery volumes.
Earnings were less than a penny per share for the quarter, compared to 8 cents in the prior year, Maple Leaf said Wednesday. The Toronto-based company's adjusted earnings — which strip out taxes and one-time items — of 11 cents per share also widely missed analysts calls for earnings of 17 cents per share.
"Our first quarter results were challenged, as expected, due primarily to weak fresh bakery volumes, an issue that is affecting the entire industry," president and chief executive officer Michael McCain said in a news release.
"We are addressing this challenge directly and expect improved results through the remainder of 2012 year period," Mr. McCain said.
Sales were $1.16-billion, up 1 per cent from $1.14-billion a year ago. Analysts had expected sales of $1.17-billion, according to Thomson Reuters.
However, sales for the Maple Leaf's bakery products group for the quarter declined 1 per cent to $370-million, compared to $372.4-million last year. Adjusted operating earnings in the division fell 73 per cent to $3.3-million compared to $12.2-million last year.
"The most significant factor was a decline in fresh bakery volumes, a trend which has been experienced across the North American industry," the company said, adding that it will focus on higher growth categories to increase volumes for the rest of the year.
The division was also hit by higher input costs and inflation. Maple Leaf has raised some bakery prices to deal with higher raw materials costs on everything from sugar to flour.
Sales for the company's protein group, which includes its meat products and agribusiness operations, increased 2 per cent to $790.8-million in the quarter, compared with $775.5-million for the prior year period.
But its pork processing operations were hit by industry packer margins that were 98 per cent lower than last year, the company said.
It also booked a $20.4-million charge in the quarter related to a massive restructuring of its operations. Those costs amounted to $26.1-million in the year-earlier period.
Maple Leaf has been cutting costs and restructuring its operations.
The company closed two bakeries in the Greater Toronto Area during the quarter as it works to consolidate production at its new bakery in nearby Hamilton, Ont.
In February, it announced it was closing a chicken processing plant in Ayr, Ont., in a move that will result in the net loss of about 100 jobs.
The closing is part of a plan to consolidate the company's poultry operations at its Brantford and Mississauga, Ont., plants.
Maple Leaf is Canada's biggest food processor, making and selling such well-known store brands as Maple Leaf, Burns and Schneiders hot dogs, Dempster's bread, Olivieri pasta, as well as Shopsy's deli meats and Mitchell's Gourmet foods.
Last year, Maple Leaf announced a plan to cut 1,550 jobs by closing plants in four provinces and streamlining distribution, part of a three-year, $560-million restructuring plan expected to boost competitiveness and profitability.
Maple Leaf has 21,000 employees at its operations across Canada and in the United States, Europe and Asia.
Wallace McCain —through McCain Capital Corp. and special voting rights — had controlled the company until his death in May at age 81. As part of his estate planning, the shares were transferred to Michael McCain in July.