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Maple Leaf narrows Q4 loss

Still smarting from last summer’s major deli meat recall, Maple Leaf Foods was nevertheless able to post a smaller net loss for its fourth fiscal quarter (Q4).

The Toronto food manufacturing giant on Tuesday reported a net loss of $14.58 million on $1.34 billion in sales for its Q4 ending Dec. 31, up from a loss of $22.07 million on $1.27 billion in the year-earlier period.

For the full year, the company posted a net loss of $36.86 million on $5.24 billion in sales, down from a profit of $194.96 million on $5.21 billion in fiscal 2007.

The Q4 results include an estimated hit in the range of $59 million to $69 million before taxes, related to the recall of packaged meats from a Maple Leaf plant in Toronto linked to 20 fatal cases of listeriosis across Canada and 36 other cases of people, some otherwise terminally ill, sickened by the disease.

The company launched a major and well-publicized product recall that crossed over into other food brands using product from the facility. Facility 97B, the Toronto plant tied to the outbreak was shut down Aug. 20 but has since resumed production.

“Last year was a historically challenging year on many fronts as we managed through unprecedented spikes in global commodity prices, financial market meltdowns, and the largest product recall in Canadian history,” Maple Leaf CEO Michael McCain said in Tuesday’s release.

“Within this context, we are satisfied with the results we were able to deliver.”

However, the company said its Q4 shows consumer confidence “strengthening” in its products and sales volumes recovering for its meat products group.

The company’s major restructuring of its slaughter and processing (or “protein”) operations, starting in October 2006, also contributed to Q4 cost savings in 2008, Maple Leaf said.

“Our packaged meats volumes have almost fully recovered, although we must demonstrate that consistently and we continue to experience significant margin compression,” McCain said.

“Aggressive promotion”

“Overall we are pleased with the early progress made in recovering our packaged meats business, and are even more confident in the direction of our transformational efforts.”

Maple Leaf’s restructuring plans since late 2006 have included putting its Burlington, Ont. pork plant up for sale last July, shutting its pork plant in Saskatoon and cancelling plans for a new facility there, all with the goal of meeting the company’s fresh pork needs through its slaughter and processing plant at Brandon, Man.

Maple Leaf added Tuesday that it is also now “pursuing an aggressive promotion and product innovation program to drive sales and profitability.”

Among Maple Leaf’s other businesses, poultry earnings declined due to lower industry processor margins and the cost of a six-week strike at its Edmonton facility, the company said.

In its agribusiness group, Mapke Leaf wrapped up the sale of its Alberta and Ontario businesses and a small genetics business, and consolidated its remaining wholly owned operations in Manitoba, thus cutting the number of hogs under its management to about 220,000 in Q4 — or about 20 per cent of the supply into its Brandon plant, the company said.

“Agribusiness earnings also include a $3 million government stability grant received in the quarter related to previously owned hog production operations in Ontario,” it noted.

Q4 earnings from rendering were up, the company said, though pricing of rendered products has “continued to decline” through Q4 and into 2009 as commodity markets “normalized from the unprecedented high prices in the first half of 2008.”

Maple Leaf said its bakery business posted improved margins in Q4 “as input costs declined.”

Other Q4 income included an $8.3 million insurance payout stemming from an oven fire at a Maple Leaf-owned bagel plant in the U.K. earlier in the year, plus another net insurance payout of $4.7 million in Q4 against losses from a sow barn fire, the company said.

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