Financial Overview

Sales for the third quarter decreased 3.6 per cent to $1,296.6 million compared to $1,344.3 million last year. The sales decline was due primarily to lower fresh meat prices, the strategic exit or sale of non-profitable hog operations in 2008, and lower volumes in the Bakery Products Group.

Adjusted Operating Earnings increased to $63.0 million compared to $41.1 million last year, driven by improved performance in prepared meats, fresh poultry and bakery operations, combined with reduced losses in hog production operations as a result of benefits from restructuring initiatives.

Net earnings increased to $22.5 million ($0.17 per share) in the third quarter of 2009 compared to a net loss of $12.9 million ($0.10 per share) last year.

CEO's comment

"Our third quarter results showed a very material increase in profitability compared to last year and prior historical levels and we are very pleased with this significant progress," said Michael H. McCain, President and CEO.

"We benefited from the core strength of our bakery business, combined with substantial recovery in our packaged meats business. The sustainable earnings improvements from the protein restructuring implemented over the past three years are now more visible in our results. While we are making great progress, we still have to complete the work underway to fuel higher growth and margins consistent with our consumer packaged goods peer group."

Business Segments

Meat Products Group

The group includes value-added prepared meats; chilled meal entrees and lunch kits; value-added fresh pork, poultry and turkey products.

Adjusted Operating Earnings in the Meat Products Group were $18.1 million compared to $0.8 million last year reflecting solid progress in the recovery of the prepared meats business, which was impacted by a product recall in August 2008, and benefits from restructuring activities. Prepared meats performance also benefited from lower raw material costs, while volume continued to trend close to historical levels. Management remains focused on driving volume growth and improving earnings in this business, which is not yet performing to full potential. In addition, the Company plans to make investments in this business to improve efficiencies and reduce supply chain costs. Improved industry processor margins and yield efficiencies increased earnings in the Company's poultry operations, while results from primary pork processing were largely consistent with last year as lower pork markets were offset by restructuring and currency benefits.

Market leadership in innovation to drive deeper customer relationships and growth in higher margin packaged meats and meals products is a primary strategic focus as the Company has repositioned itself as a branded consumer packaged goods business. In the third quarter, Maple Leaf introduced re-sealable packaging for deli meats and bacon, responding to consumer needs by vastly improving convenience and storability. Maple Leaf Gourmet, a line of five ready-to-bake and serve gourmet fresh chicken and pork entrees, was also launched in the third quarter.

Agribusiness Group

The group includes pig production and animal by-products recycling.

Adjusted Operating Earnings for the Agribusiness Group in the third quarter of 2009 increased to $15.1 million from $12.3 million last year. Benefits from restructuring have improved results in hog production. Hog production in North America, however, continues to be unprofitable as a result of lower market prices. Earnings from rendering operations, which include biodiesel production, were slightly lower than last year due to lower commodity prices that decreased the value of rendered by-products.

Further Reading

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