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Meat Recall Mirrored in Maple Leaf's Fiscal 2008

25 February 2009

CANADA - Last year's massive meat recalls seriously affected Maple Leaf Foods fourth quarter results for 2008, sending share values tumbling from $0.20 to $0.12 in the course of twelve months.

According to a Maple Leaf report, the recall significantly affected the business by an estimated $59 million to $69 million before taxes, of which $19 million in one-time direct costs has been excluded in calculating Adjusted Earnings per Share.

However, the company says that consumer confidence is now strengthening and volumes are beginning to recover in Meat Products Group.

"Last year was a historically challenging year on many fronts as we managed through unprecedented spikes in global commodity prices, financial market meltdowns, and the largest product recall in Canadian history," said Michael H. McCain, President and CEO. "Within this context, we are satisfied with the results we were able to deliver. They are a reflection of the diversity of our business, the capability of our people to manage through extreme adversity and the strength of our entire brand portfolio."

"While our profits were down 40 per cent in the quarter, overshadowed by the product recall which, excluding one-time amounts, is estimated to have cost the Company $40 million to $50 million before taxes, there were many areas where we showed substantial improvement. These included normalizing our bakery margins after absorbing the impact of commodity markets earlier in the year, increasing benefits from our protein business restructuring, and steadily regaining consumer confidence in the Maple Leaf brand.

"Our packaged meats volumes have almost fully recovered, although we must demonstrate that consistently and we continue to experience significant margin compression. Overall we are pleased with the early progress made in recovering our packaged meats business, and are even more confident in the direction of our transformational efforts. We look forward to improving trends in 2009."

ThePoultrySite News Desk



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