The Canadian company also cited strong performance in its bakery business as a further reason for what President and CEO Michael H. McCain called “a very material increase in profitability compared to last year and prior historical levels”.
Growth drivers
Maple Leaf said it planned to focus on its "high margin" packaged meat and meals businesses to drive future growth. The company anounced it was working to reposition itself as a branded consumer packaged goods business. It said it had introduced resealable packaged deli meats and bacon during the quarter in response to consumer demand for more convenience products.
Its Meats Products Group recorded adjusted operating earnings of C$18.1m for the period compared to just $0.8m in 2008. A company statement said this reflected “solid progress in the recovery of the prepared meats business, which was impacted by a product recall in August 2008”.
The prepared meats business also benefited from falling raw material costs while trading volumes recovered to near historical levels. But the Maple Leaf management said it believed the business was not yet performing to its full potential and as looking to improve both volume sales and earnings.
Supply chain cost reductions
Maple Leaf also revealed plans to invest to reduce supply chain costs and improve efficiencies in the business. Its poultry operations benefited from better processing margins and better efficiencies in yields, while pork processing results were largely in line with 2008. Restructuring and currency benefits offset lower demand for pork, said the company.
"We benefited from the core strength of our bakery business, combined with substantial recovery in our packaged meats business,” said McCain. “While we are making great progress, we still have to complete the work underway to fuel higher growth and margins consistent with our consumer packaged goods peer group."