MISSISSAUGA, Ont. – Restructuring costs and adverse conditions in the market for fresh pork weighed heavily on fourth quarter earnings at Maple Leaf Foods Inc. The company announced it will increase its quarterly dividend by $0.015 per share or 11.5 percent to $0.145 per share, effective the first quarter of 2019.
Net earnings for the most recent quarter ended Dec. 31, 2018 fell 80 percent to C$11.9 million, or C$0.10 per basic share, compared to C$59.1 million, or C$0.47 per basic share, reported in the fourth quarter of 2017. The company attributed the result to restructuring costs of C$42.2 million primarily related to the company’s strategic investment in poultry and acquisition costs, which are excluded in calculating adjusted operating earnings of C$54.0 million compared to C$64.7 million in the fourth quarter of 2017.
Sales for the fourth quarter climbed 2.0 percent to C$893.9 million or decreased 1.9 percent after adjusting for the impact of IFRS 15 [International Financial Reported Standard] and acquisitions. “Improved commercial performance in prepared meats, driven by favorable sales mix, pricing actions and lower input costs, and in the fresh value-added portfolio were more than offset by adverse fresh market conditions and strategic investments to complete the launch of food renovation for the company’s flagship brands,” Maple Leaf stated. “Results also benefited from a lower level of variable compensation costs compared to the prior year.”
For the full fiscal 2018, net earnings were C$101 million, or C$0.81 per basic share, compared to C$164.1 million, or C$1.28 per basic share, reported for fiscal 2017.
Sales for fiscal 2018 declined 0.8 percent (or a decrease of 0.5% after adjusting for the impact of IFRS 15 and acquisitions.) to C$3,495.5 million compared to C$3,522.2 million in fiscal 2017.
“In a year marked by the most challenging industry pork markets in a decade, we delivered a 10 percent or greater adjusted EBITDA margin in three out of four quarters,” said Michael H. McCain, president and CEO. “Strong performance in our branded prepared meats business, a rapidly growing plant protein business, recent acquisitions and planned investments point to the strength of our foundational strategies. By striving passionately to ‘raise the good in food,’ we are uniquely positioning Maple Leaf for sustainable growth as we satisfy the protein demand of a growing population who have new ideas about what good food means.”
Adjusted operating earnings for 2018 were $215.6 million compared to $263.8 million reported in 2017.
“For the year, the core business experienced sales growth in prepared meats, sustainable meats and plant protein, which was more than offset by declines in fresh market prices,” the company noted. “Improvements in sales were primarily driven by pricing actions taken to mitigate inflationary pressures, favorable sales mix supported by food renovation and growth in the US for both sustainable meat and plant protein.”