Friday, December 19th1.3°C
24295
23791

Maple Leaf Foods is hoping consumers get used to paying more for bacon, sausages

TORONTO - Being forced to pay more for bacon and sausages left a bad taste with some consumers in the last quarter, but Maple Leaf Foods is anticipating that the higher prices will not act as a deterrent for much longer.

The Toronto-based meat processor, which also makes hot dogs and deli meats, said a price hike helped the company achieve a nearly 10 per cent increase in sales in the second quarter, topping $831.7 million. But although its total sales were higher, the prices resulted in consumers buying less.

Maple Leaf president and chief executive Michael McCain said it is a trend he expects to eventually abate.

"As expected, a price increase of this magnitude had a short term impact on volumes," he told an analyst call Thursday following the company's latest earnings release.

"This volume decline was most dramatic after the first weeks of the price increase, but since then, has been steadily recovering. We're cautiously optimistic all our volumes will be restored, but patience is required."

In May, the company raised prices on all its products by an average eight per cent because of an outbreak of the Porcine Epidemic Diarrhea (PED) Virus, which has killed millions of piglets since it was discovered last year.

The virus does not affect humans or the food they consume, but is estimated to have wiped out about 10 per cent of the U.S. pig population and has been blamed for recent increases in bacon and pork prices. Farmers have struggled to control the virus, because little is known about how it spreads and there is not yet a federally approved vaccine in the U.S.

McCain said whether consumers will get used to buying pork products at the higher prices, still remains one of the factors that could hurt the company.

"The pace of which this occurs is one of the outstanding risk factors for the balance of this year," he said.

BMO economist Aaron Goertzen wrote in a report that hog prices are at the highest level since the mid-1990s, but the outlook is somewhat positive because the PED virus looks like it is dying down — for the moment.

"Although a PED flare-up can't be ruled out, futures markets appear optimistic that the worst has passed and are pricing in a sharp decline in hog prices over the remainder of this year and in 2015," Goertzen said.

Meanwhile, Maple Leaf (TSX:MFI) reported a profit of $897.8 million or $6.38 per share in its latest quarter boosted by the sale of its 90 per cent stake in Canada Bread to Mexican company Grupo Bimbo. That compared with a loss of $2.5 million or two cents per share a year ago.

Sales for the three-month period ended June 30 totalled $831.8 million, up from $759.3 million.

The company's loss from continuing operations for the second quarter was $39.5 million or 28 cents per share compared with a loss of $38.4 million or 27 cents per share year.

The results for the quarter included $20 million or 11 cents per share of pre-tax costs related to restructuring and other related costs.

In April, Maple Leave announced it was closing its wiener production plant in Hamilton and moving workers to a new bigger facility in the same city, west of Toronto.

The company also plans to close four meat plants by the end of the year. Once its restructuring plan is finished, it will operate 13 meat plants instead of 22, and two distribution centres instead of 19.

McCain said the company was making "good progress" on its strategic agenda, although transition costs continue to be significant.

Follow @LindaNguyenTO on Twitter.

The Canadian Press


Read more Business News




Recent Trending




Today's Market
S&P TSX14468.26+121.51
S&P CDNX676.54+11.04
DJIA17804.8026.65
Nasdaq4765.38+16.983
S&P 5002070.65+9.42
CDN Dollar0.8618+0.0001
Gold1197.20+2.50
Oil56.50+2.39
Lumber338.60+1.70
Natural Gas3.446-0.196

 
Okanagan Companies
Pacific Safety0.12-0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.25-0.03
Cantex0.03-0.005
Anavex Life Sciences0.1726+0.0026
Metalex Ventures0.05-0.005
Russel Metals25.58-0.42
Copper Mountain Mining1.55-0.02
Colorado Resources0.120.00
ReliaBrand Inc0.011-0.0089
Sunrise Resources Ltd0.05-0.005
Mission Ready Services0.215-0.01

 
23744


24588

FEATURED Property
2154468#102, 2900 Abbott St
2 bedrooms 2 baths
$672,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


My final thoughts on real estate

This will be the last column I write on real estate. Largely because at the end of the year I will be handing in my license. After 20+ years of working in land development, resort development and rea...


Reflecting on the end of the year

The importance of the end of the year and the Christmas holidays is profound. It is a time to reconnect with family and traditions that have made us who we are. But the year-end has always been a time...


Parenthood: Estates, insurance & taxes

It is now even more important to ensure your loved ones are well looked if anything should happen to you. Here are a few topics to consider helping you prepare for some of the unexpected events that c...

_





24386


Member of BC Press Council


24433