Bakery fuels Maple Leaf's Q2 recovery02 August 2012Canadian food firm Maple Leaf delivered stronger profitability in its bakery business in the second quarter which helped to offset a challenging start to the year. Overall, the firm booked a 7.3% first-half drop in adjusted operating earnings to $71.9 million, down from $77.5 million a year earlier. Net earnings for the second quarter were $32.5 million, compared to $24.6 million in the second quarter last year. But Michael H McCain, Maple Leaf’s president and chief executive, said that the firm benefited from a stronger second quarter, with bakery and prepared meats delivering better profits. “We've implemented selective price increases, grown our core branded businesses and our value creation initiatives are contributing to margin growth. While we made excellent progress in the quarter, we are heading into challenging commodity markets driven by drought conditions throughout North America that will fuel further food inflation,” he said. Bakery sales for the second quarter were $404.7 million, compared to $405.1 million last year. Sales increased 1% after adjustments following the closure of an unprofitable bakery in the UK and currency translations in the US and UK. The sales increase was mainly due to stronger volumes and selling prices in the North American frozen bakery operations. Volumes in the fresh bakery business were flat. Adjusted operating earnings for the second quarter of 2012 increased 8% to $32.2 million, up from $29.9 million last year. Maple Leaf said that its bakery business had rallied in the second quarter due to increased promotional and marketing activity and good summer weather in the US. However, the company said that ‘an underlying decline in consumer demand continues to impact results’. Frozen bakery earnings continued to improve due to higher pricing and volumes in the North American business, an improved sales mix in the UK and lower overhead costs resulting from the closure of a bakery in Walsall, UK in the first quarter. The company said that the cost savings were partly offset by higher inflationary costs in the business. | |
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