020259 Rising Pork Sales Help Double Maple Leaf Profit

Toronto - Maple Leaf Foods Inc., the Canadian meat and baked goods producer, said its fourth-quarter earnings nearly doubled because of solid performances from its pork and bread operations.

The company's Brandon, Manitoba, pork facility, which it started in 1997 with a C$140 million ($88 million) investment, finally contributed to operating earnings in the fourth quarter, it said.

Maple Leaf had said Brandon would hit a profit last year, but after three quarters investors were wondering if all was well at the plant.

“They had lots of problems there from finding pigs to training employees,” said Bob Gibson, an analyst at Maison Placements. “But their fourth-quarter results are fantastic. In pork they have gone a from a big loss a couple of years ago to a significant profit.”

Maple Leaf's pork operations, which bring in majority of its sales, recorded an operating profit of C$23.1 million for the quarter, up substantially from C$1.6 million in the year-ago period.

As a result, Maple Leaf's net profit rose 96% to C$24.7 million, or 24 Canadian cents a share, from C$12.6 million, or 12 Canadian cents a share.

“I think you can see quarter over prior year (quarter) improvement at Brandon,” chief executive Michael McCain told analysts at a conference call.

He said Brandon's performance could be a “bit choppy and a bit uneven but we are very confident we will make progress on a similar curve” as last year.

McCain said he had “very high confidence” that Brandon would be able to garner the livestock supply needed to step up production to two full shifts. Brandon needs 90,000 hogs to justify two full shifts; the current number is about 72,000, McCain said. Two full shifts would translate to higher profits and sales.

During the quarter, revenue rose 22% to C$1.29 billion from C$1.07 billion in the fourth quarter of 2000.

Canada Bread, 68% owned by Maple Leaf and known for its Dempster's whole grain line, recorded a 71% increase in sales during the quarter to C$238 million. But its profits fell slightly to about C$7.4 million.

Canada Bread's sales rose 13% during the quarter, excluding the impact of the acquisition of Multi- Marques, in which the baker gained 100% ownership in October.

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