VANCOUVER - Fletcher's Fine Foods Ltd. announced its unaudited third quarter results. Despite a labor disruption at its Fresh Pork Division's Red Deer, Alberta hog processing plant, Fletcher's reported steady sales through the continued growth of its Prepared Foods Division. Sales for the quarter were $120 million as compared to $125 million in the same period last year. The Prepared Foods Division's sales for the third quarter were $78.7 million as compared to $57.3 million in 1997, an increase of over 37%.
On a year to date basis, Fletcher's sales for 1998 were $305 million as compared to $296 million in 1997. The Prepared Foods Division's sales for 1998 were up over 43% to $181 million as compared to $126 million in 1997.
Earnings before unusual items and taxes were up substantially for both the quarter and year to date. For the quarter, they were up 75% to $2.7 million in 1998 as compared to $1.5 million in 1997. For the year, they were up 250% to $7.5 million as compared to $2.1 million in 1997.
Due to a one time charge of $9.5 million relating to the Red Deer labor dispute, Fletcher's incurred a net loss of $3.5 million for the quarter and $0.5 million on a year to date basis. The majority of the $9.5 million charge, about $7.1 million, represents payments made to unionized employees at the Red Deer plant under a new six year labor agreement. These payments were in exchange for a significant restructuring of the plant's wage rate structure including a decrease of up to 35% in wage rates for certain positions. The remainder of the charge relates primarily to the costs of hiring, transporting and training replacement workers who operated the facility, albeit at a reduced level, during the labor dispute. Offsetting the charge was a gain of $862,000 on the sale of our 20% interest in a small hog processing facility located just outside of Vancouver, BC.
“Once again, the performance of our Prepared Foods Division validates our strategy of focusing on the continued development of our branded consumer products business. Despite the very difficult operating environment created by the Red Deer labor disruption, our earnings before unusual items continued to show strong growth” said Fred Knoedler, President and CEO. “Year to date earnings before interest, taxes, depreciation, amortization and unusual items increased by 146% to $14 million in 1998 as compared to $5.7 million in 1997,” added Mr. Knoedler.
“Our goal is to be the leading marketer and manufacturer of branded processed pork products in Western Canada and the Western U.S. The successes we are experiencing in both of our division's are rapidly moving us closer to achieving this goal” added Mr. Knoedler.
“Over the last two years we have invested a significant amount of capital in both our Prepared Foods and Fresh Pork Divisions. The improvement in our earnings before unusual items in 1998 is directly attributable to our investments in the Prepared Foods Division” said George Paleologou, Vice President and CFO. “Looking forward, we expect the Fresh Pork Division, with its new labor contract and recently completed expanded Red Deer facility, to also begin generating superior returns,” added Mr. Paleologou.
Fletcher's has been engaged in the food processing business since 1917 and has manufacturing facilities in Alberta, British Columbia, Oregon, Saskatchewan and Washington.
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