Fletcher’s Fine Foods Ltd. rode record fourth quarter earnings to a year-end financial statement showing sales 30 percent higher than last year and net earnings up by almost 10 fold.
The hog slaughter and meat processing company last week reported it had sales of $391.1 million in the year ending Dec. 31, 1997, compared to $300.1 million in 1996.
Net earnings were $6.09 million ($1.10 per share), compared to $628,000 (18 cents a share) the year before.
The company said about half of its growth came from internal expansion in its prepared foods and fresh pork divisions. The other half resulted from the acquisition of Grimm’s, a maker of specialty meats and deli items.
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Fletcher’s chair Don Loewen said the company’s fresh pork divisions faced challenges during the year. Its first quarter was affected by a hog bidding battle with Maple Leaf Foods in a struggle for market share and generally faced high hog prices through most of the year.
“This is proof that Fletcher’s strategic focus on developing its branded consumer products business makes sense,” he said in a release.
Judging by the fourth quarter results and indications from early this year, the company is entering a more profitable period.
October to December earnings were $1.8 million on sales of $95.1 million compared to $400,000 on $71.9 million last year in the same period.
Greg Whalley, Fletcher’s spokesperson, said hog prices began to drop late last year. Given a cheaper raw product and steady processed pork price, margins improved during the period. Also, Maple Leaf’s Gainers plant closed late last year, allowing Fletcher’s to boost production at its Red Deer plant, he said.
Since Fletcher’s went public in November 1996, it has purchased six smaller food companies and announced investment of $28.5 million in expanding its Red Deer, Alta. packing plant.
The new companies and plant expansion should allow the company to meet its target of 15 percent return on invested capital in 1998, the company said.
The report had little immediate effect on Fletcher’s share price.
