Volatile protein market blamed | The company is considering the sale of its interest in Canada Bread
(Reuters) —Maple Leaf Foods has reported lower-than-expected results for the third quarter, hurt mainly by weakness in its meat business.
Excluding special items, the company, which is undergoing a major restructuring, posted a loss of one cent per share, compared with a year-earlier profit of 13 cents.
Analysts on average had expected earnings of eight cents a share, according to Thomson Reuters.
Maple Leaf said revenue slipped 2.5 percent to $1.15 billion. Analysts had forecast $1.2 billion.
The company’s results missed expectations mainly because of poor performance in the meat division, said analyst Robert Gibson of Octagon Capital.
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Maple Leaf chief executive officer Michael McCain said the company has been going through a difficult time.
“This is a very challenging period of transition for the Maple Leaf organization, as the short-term impact of volatile protein market conditions, combined with the significant cost of change, has been material,” he said in a statement.
Maple Leaf is carrying out a multiyear program to upgrade its meat operations by modernizing some plants and shutting others as it seeks to boost profits and better compete with U.S. rivals.
It has also put up for auction its 90 percent stake in Canada Bread Co., although it said a sale is not ensured.
It recently reviewed its opportunities to accelerate profitable growth across its $1.6 billion bakery business.
However, before committing re-sources, it decided to explore alternatives, including a sale of its stake in Canada Bread.
“This is about a great business with a good view to help it to grow profitably over the next four or five years, but because we’re at a crossroads … we felt it was prudent to consider the alternatives,” McCain said.
The company sells bread under the Dempsters brand and other food products under banners such as POM, Ben’s and Sunmaid.
It targeted Mexico’s Grupo Bimbo, one of the world’s largest bread makers, and private equity firms, as pot-ential buyers, according to several people familiar with the matter.
Approval by the Canadian government would be necessary for a foreign investor to buy Canada Bread.
Since that announcement, Canada Bread sold its Olivieri Foods fresh pasta and sauce business to Spanish food processing company Ebro Foods SA for about $120 million.
Olivieri accounted for less than 10 percent of Canada Bread’s revenue in 2012.
In August, Maple Leaf struck a deal to sell its Rothsay rendering and biodiesel business to Darling International Inc. for $645 million.
