Beleaguered Toronto pet food maker Menu Foods is describing its first fiscal quarter as a “significant turnaround.”
The income trust posted a net loss of $2.2 million on $55.6 million in sales during the quarter ending March 31, an improvement over a $17.5 million loss on $64.5 million in the year-earlier period.
The company was one of the firms at the centre of one of the largest-ever North American pet food recalls in March last year, when an overseas supplier’s wheat gluten, a common pet food filler, was found to have been spiked with melamine and other compounds.
Menu today bills itself as the first of a number of affected companies to recall affected product. “Menu, its competitors, its customers and consumers were all victims of a terrible fraud perpetuated on the pet food industry as a whole,” the company wrote in its quarterly report Thursday.
Customers representing 37 per cent of Menu’s 2006-level business pulled out of their dealings with the company during 2007, the company said, after which it restructured to better match capacity to sales.
The company still expects its total costs from the recall to total $55 million, as it estimated in its Q4 report earlier this year, noting that it’s working toward a settlement of a multi-district lawsuit in the U.S. Scheduling for Canadian court approval of a similar suit hasn’t yet been confirmed, Menu said.
Menu’s sales were down 13.8 per cent for the quarter, due to a 22.6 per cent decrease in volume sold and the rising Canadian dollar, offset by recall-related sales returns that had the effect of increasing sales on a comparative basis, the company said.
Menu said it expects to fully implement price hikes for its private-label customers during its Q2 (April through June), which it estimates will translate to a three per cent increase in sales and allow the company to recover some of the cost increases it’s had to absorb from its own suppliers since the previous price hike.