Maple Leaf Foods is having trouble bouncing back from the strike-lockout that closed several of its plants earlier this year.
But Archibald McLean, vice-chair and chief executive officer of Maple Leaf Foods, said last week the new labor agreement and corporate restructuring that led to disappointing second-quarter results will eventually pay off.
“While we are disappointed with the company’s recent financial results, we are not discouraged by them,” he said in a news release.
“On the contrary, we are proud of the company’s recent strategic accomplishments which are consistent with our dedication to maximizing long-term shareholder value.”
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Net earnings for the quarter that ended June 30 were $4.3 million or five cents a share, down from $13.9 million or 15 cents per share last year.
The year-to-date net loss of $49.6 million reflects the pre-tax special charge of $82.9 million taken in the first quarter. Net earnings for the first two quarters last year were $17.8 million, or 19 cents per share.
Part of the special charge relates to one-time payments for employees who took a wage rollback. Other costs relate to centralization of management and realignment of production facilities.
Sales for the second quarter were $822 million, down from $926 million last year. Operating earnings were $19.8 million compared to $34.1 million last year.
The declines were primarily due to lost sales and margins at Maple Leaf Meats as a result of the labor disputes, the company said. It expects it will take several more quarters to recover from the dispute.
During the second quarter the company re-opened three meat facilities closed during the dispute.
The company is trying to recapture prepared meat sales, rebuild its market share of live hogs in Ontario and restore plant efficiencies at the three facilities that were closed. Construction of the Brandon plant is on schedule.
Bakery operations were hurt by restructuring of three regional bakeries into one national operation and by route franchising in Western Canada. However, the company said the initiatives have long-term benefits.
During the second quarter, the company announced plans to sell its Country Style Donuts and Buns Master Bakeries.
The Agribusiness Group, which primarily produces hogs in Quebec, was hurt by low hog prices.
The company declared a dividend of four cents per share payable on Sept. 30 to shareholders of record on Sept. 18, 1998.
