The labor dispute that closed Fletcher’s Fine Foods Red Deer, Alta., plant earlier this year didn’t stop the company from increasing sales and net earnings in the second quarter.
The results validate the company’s strategy of focusing on branded consumer products, said Fred Knoedler, Fletcher’s president and chief executive officer.
“Despite the very difficult operating environment created by the Red Deer labor disruption, our overall profitability continued to improve due to the success of our prepared foods division,” he said in a news release.
However, the strike will affect third-quarter results. The company said it will take a special charge of $9.2 million before taxes to cover the new contract’s offer of lump sum payments to employees who take wage reductions. The charge also covers costs incurred during the strike such as increased security and operating inefficiencies associated with hiring, transporting and training replacement workers.
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Sales in the second quarter, which ended June 13, increased to a record $91.8 million compared to $90.3 million in the same period in 1997. Net earnings rose to $1.7 million or 26 cents per share for the quarter, compared to $1.4 million or 25 cents per share in 1997.
Sales for the processed food division were $56.7 million in the second quarter, up by 53 percent over last year, while its gross profit increased by 74 percent to $12.7 million.
The fresh pork division saw sales fall to $35.2 million, down 34 percent from the same quarter last year. Gross profit was $1.7 million, down 27 percent.
The labor dispute affected the last half of the quarter. It was settled on June 12 with a six-year agreement resulting in wage rollbacks of up to 35 percent. The contract allows employees to select between a one-time bonus payment and maintaining their current wage for two years.
The company also announced the sale of its remaining 20 percent interest in Britco Export Packers Ltd., a small hog processing facility in Langley, B.C., for $1 million.
