Disappointing Maple Leaf profit blamed on pork prices

(Reuters) — Canadian packaged meat producer Maple Leaf Foods Inc. missed analysts’ estimates for quarterly profit as weak pork prices offset growth in its prepared meats business, sending its shares down four percent.

Pork prices have taken a beating from the China-United States trade war, with China’s retaliatory tariffs affecting demand from the South Asian country, which is the world’s biggest pork importer.

The company said it expects continued uncertainty in fresh pork markets, citing trade tensions, potential for increased supply and outbreaks of African swine fever in China.

Beijing has reported more than 100 outbreaks of the disease since August last year. African swine fever does not harm humans but is deadly to pigs and there is no vaccine or cure.

Maple Leaf, which owns the Greenfield Natural Meat, Prime and Schneiders brands, said Feb. 28 that sales rose about two percent to C$893.9 million in the fourth quarter, while gross margin fell 8 percent.

Excluding items, the company earned 29 cents per share, missing analysts’ average estimate of 34 cents, according to IBES data from Refinitiv.

Maple Leaf’s net earnings slumped 80 percent to $11.9 million, or 10 cents per share, in the quarter ended Dec. 31, as the company recorded a $40.7 million charge related to its investment in a poultry facility in Ontario.

In November, Maple Leaf said it planned to set up a $660 million poultry processing plant in Ontario, with investments from the Canadian and the provincial governments.

The company’s shares were down 3.8 percent at $27.50, shortly after the quarterly statement was released.

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