first quarter results ‘10 Some of the statements in this presentation may constitute forward-looking information and future results could differ materially from what is included. Please refer to the Company’s Management’s Discussion & Analysis for the year ended December 31, 2009 and other public filings for a description of operations and factors that could impact the Company’s financial results.
highlights Modest earnings growth, with Adjusted Operating Earnings 1 up 7.3% to $33.9 million from $31.6 million last year – Earnings increased 53.2% in Protein Group, despite significant short-term impact of rising meat costs – Weaker performance in U.K. and North American frozen bakery operations resulted in 14.2% decline in Bakery Group earnings Anticipating near term improvements in U.K. and North American frozen bakery. Volume recovery, cost reduction and pricing initiatives will contribute to better results through balance of 2010 Continuing to implement longer-term strategic agenda to expand margins and drive organic growth 1 All operating earnings measures are defined as earnings from operations before restructuring and other related costs and other income. 2
adjusted EPS increased 62% to $0.09 Adjusted Operating Earnings ($Millions) Adjusted Earnings Per Share ($CAD) $196 $0.57 $63 $0.21 $58 $128 $0.19 $44 $41 $0.13 $0.12 $35 $0.12 $0.29 $34 $33 $32 $0.09 $19 $0.05 $0.04 -$0.01 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year All operating earnings measures are defined as earnings from operations before restructuring and other related costs and other income. All earnings per share measures are defined as basic earnings per share adjusted for the impact of restructuring and other related costs, net of tax and non-controlling interest. 3
meat products group Sales ($Millions) Sales were $768.2 million compared to $822.2 million last year $3,310 $857 $3,304 $822 $838 $846 – Excluding impact of currency, sales declined $842 $830 $816 $763 $768 1.5% Adjusted Operating Earnings increased to $14.2 million Increased earnings in prepared meats – Improved margins due to better net pricing and mix, and benefits from cost containment ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 initiatives; partly offset by lower volumes Q1 Q2 Q3 Q4 Full Year – Sharp rise in meat costs late in 2009 impacted pace of margin improvement Operating Earnings ($Millions) – Staged price increases in Q2 and Q3 to recover increased input costs; may have some impact on volumes in the short-term $25 $55 $24 Strong fresh poultry results $18 – Benefited from improved markets and better $14 $29 yields and efficiencies $11 $6 Lower primary pork processing earnings $2 $1 -$2 – Due to the higher Canadian dollar and weaker export market returns, which offset the ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 Q1 Q2 Q3 Q4 Full Year benefit of higher North American pork prices 4
rising hog and pork markets Weekly USDA Pork Carcass Cutout Weekly USDA CME Hog Price 90 90 85 85 80 80 75 75 Price/cwt (USD) Price/cwt (USD) 70 70 65 65 60 60 55 55 50 50 45 45 Jul/09 Sep/09 Nov/09 Jan/10 Mar/10 Jul'09 Sep'09 Nov'09 Jan'10 Mar'10 5-year Standard 2009/10 average Deviation 5
agribusiness group Sales ($Millions) Sales were $41.8 million compared to $44.6 million last year $233 $64 $62 $206 $56 $59 $55 Adjusted Operating Earnings $51 $45 $49 increased to $6.5 million from $2.1 $42 million last year Improved hog production performance – Stronger hog market prices and lower feed costs were offset by the rise in the ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 Canadian dollar and short-term hedging Q1 Q2 Q3 Q4 Full Year positions – $3 million related to government Operating Earnings ($Millions) support to compensate hog producers $48 for losses in prior years $30 Rendering earnings down slightly, mostly reflecting higher raw $16 material costs $15 $15 $13 $12 $8 $7 $2 -$3 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 Q1 Q2 Q3 Q4 Full Year 6
bakery products group Sales ($Millions) Sales declined to $381.5 million from $1,706 $1,705 $412.5 million last year due to $444 $437 $442 $435 $432 currency changes and lower volumes $425 $413 $382 $382 – Excluding impact of currency, sales declined 4.1% Adjusted Operating Earnings decreased to $16.7 million from $19.5 million last year – Lower sales volume reduced earnings in ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 U.S. and U.K. frozen bakery operations Q1 Q2 Q3 Q4 Full Year – Partly offset by improved results in fresh bakery Operating Earnings ($Millions) Signs of improvement in both these $102 $33 businesses $31 $83 $28 $27 – Volume recovery underway in frozen $22 bakery $20 $17 $17 – Implementing cost reduction initiatives in the U.K. that will improve manufacturing $9 efficiencies in current recessionary environment – Earnings expected to strengthen through ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 remainder of year Q1 Q2 Q3 Q4 Full Year 7
focus on growing EBITDA margins MLF Protein EBITDA margin MLF Bakery EBITDA margin Steady margin expansion as Margins typically stable and in- prepared meats business line with industry improves and benefits from U.K. and Frozen impacting protein transformation benefits margins in the short-term; are sustained actions in place to restore Focused on continued margin growth through cost reduction, pricing and innovation 8
product innovation Launched Dempster’s Premium Pitas – Popular alternative for snacks and lunches; broadens leading Dempster’s brand into new categories Maple Leaf Natural Selections ™ Deli Meats – Natural Selections is the only all- natural deli meat in Canada, available in 4 different varieties – Made with all natural ingredients – Launched nationally in April – Responding to growing market for healthy, more natural products 9
implementing strategic agenda Goal to deliver EBITDA margin target of 10-12% 1 Continue to build food safety excellence 2 Realize full potential of packaged meats business 3 Increase efficiency and reduce costs 4 Drive Organic Growth 10
capital expenditures Capital expenditures decreased to Capital Expenditures ($Millions) $28.7 million from $57.7 million last year $206 Good progress continues on SAP implementation $163 – Frozen bakery operations almost completely on SAP – one bakery to go – Successful implementations in poultry and fresh bakery plants, and several business services in 2010 to date $63 $58 $49 $49 $40 $46 New mega-scale bakery project $36 $30 $29 underway – Estimated cost of $100 million – Construction is expected to start mid- ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 Q1 Q2 Q3 Q4 Full Year 2010; commissioning to commence mid- 2011; consolidation of three smaller SAP-related Capital bakeries completed by early 2013 11
other financial highlights SG&A decreased to $126.7 million from $135.6 million last year Primarily driven by the benefit of cost containment initiatives – Debt to EBITDA ratio 2.8x; improving trend continues – Improved from 2.9x at end of Q4 2009 due to increasing earnings trend and cash control initiatives. Down from 3.8x at the end of Q1 2009. – Management comfortable with the existing debt levels Cash flow provided by operations was $64.4 million compared to a use of $38.8 million last year – Improvement is largely due to reduced working capital Completed $75 million private placement on April 28, 2010 – The notes are unsecured, bear interest at 6.08% payable semi-annually and are due in April 2015 Executed interest rate swaps for a total of $590 million – These swaps are not currently designated in a formal hedging relationship – Mark-to-market gains or losses will flow through future earnings As at April 28 th 2010, 65% of total debt was fixed and not exposed to interest rate – fluctuations 12
summary Continued earnings growth in first quarter, with substantial improvement in Meat Group despite high raw material costs The pace of this improvement was slowed by some short- term business challenges Cost reduction and pricing initiatives are underway to improve margins and earnings growth through remainder of 2010 Proceeding with longer term strategic initiatives to deliver higher margins and growth 13
first quarter results ‘10 Some of the statements in this presentation may constitute forward-looking information and future results could differ materially from what is included. Please refer to the Company’s Management’s Discussion & Analysis for the year ended December 31, 2009 and other public filings for a description of operations and factors that could impact the Company’s financial results.
Recommend
More recommend
