Maple Leaf Foods Inc. swung to a loss in the fourth quarter, as the food processor was pinched by the costs of opening new plants while running the old ones.
The maker of Shopsy's and Schneiders meat posted a loss of $22-million or 25 cents a share in the fourth quarter, compared with adjusted operating earnings of $70-million, or 27 cents a share, in the same quarter a year ago.
For the full year, the company lost $12-million, compared with adjusted operating earnings of $172-million in 2012.
Maple Leaf Foods has three main divisions: protein or prepared meats; agribusiness, which includes its hog operations; and the bakery division, Canada Bread, which it recently sold to Grupo Bimbo for $1.8-billion.
The protein group posted a loss of $53-million for the three months ended Dec. 31, compared with earnings of $38-million in the year-earlier quarter. The bakery division posted quarterly adjusted operating earnings of $31-million, down from $33-million.
In a bid to reduce production costs and boost profit, Maple Leaf Foods has built a new processing plant in Hamilton and expanded facilities in Saskatoon, Saskatchewan, Winnipeg and Brampton. It has also simplified its North American distribution network by going from several hubs to two, Saskatoon and Guelph, Ont. The company said the transition cost $15-million in the quarter and $50-million for the full year.
"We are in a peak phase of executing our prepared meats network strategy, which added tremendous costs and inefficiency in the quarter as we ramped up five new facilities while continuing to operate our parallel older plants," said Michael McCain, Maple Leaf Foods chief executive officer, said in a news release. "As expected, this is causing short-term earnings volatility, which was compounded by weak protein markets. Our bakery business delivered solid results for the quarter and increased earnings for the full year. We are very pleased with this performance, particularly with strong gains in our U.K. and frozen bakery operations."
Sales in the meat division fell by 1 per cent in the quarter and almost 2 per cent for the year, hit by as lower pork sales and falling chicken prices. Meat sales for the full year were down by 4 per cent.
The bakery division, which makes Dempster's bread and Tenderflake, saw sales fall by 3 per cent in the quarter. Lower earnings in fresh bread were partly offset by better results in the U.K. of frozen baked goods.
Maple Leaf Foods last year sold its Rothsay meat rendering and Olivieri pasta businesses for a total $745-million.
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