first quarter results 10 Some of the statements in this presentation - - PowerPoint PPT Presentation

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

• perations and factors that could impact the Company’s financial results.

2

Modest earnings growth, with Adjusted Operating Earnings1 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

highlights

1All operating earnings measures are defined as earnings from operations before restructuring and

• ther related costs and other income.

3

$19 $41 $35 $32 $44 $63 $58 $33 $34 $128 $196

adjusted EPS increased 62% to $0.09

Adjusted Earnings Per Share ($CAD) Adjusted Operating Earnings ($Millions)

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.

Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10

$0.12 $0.21 $0.19 $0.09 $0.04 $0.13 $0.12

• $0.01

$0.05 $0.29 $0.57

Q1 Q2 Q3

Full Year

Q4

’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

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meat products group

Sales were $768.2 million compared to $822.2 million last year

– Excluding impact of currency, sales declined 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 initiatives; partly offset by lower volumes – Sharp rise in meat costs late in 2009 impacted pace of margin improvement – Staged price increases in Q2 and Q3 to recover increased input costs; may have some impact

• n volumes in the short-term

Strong fresh poultry results

– Benefited from improved markets and better yields and efficiencies

Lower primary pork processing earnings

– Due to the higher Canadian dollar and weaker export market returns, which offset the benefit of higher North American pork prices

$763 $846 $838 $857 $822 $842 $816 $830 $768 $3,304 $3,310

Sales ($Millions) Operating Earnings ($Millions) Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10

Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10

$25 $6 $1 $2 $18 $24

• $2

$11 $14 $29 $55

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rising hog and pork markets

2009/10 5-year average Standard Deviation

Weekly USDA CME Hog Price

45 50 55 60 65 70 75 80 85 90 Jul/09 Sep/09 Nov/09 Jan/10 Mar/10

Price/cwt (USD)

Weekly USDA Pork Carcass Cutout

45 50 55 60 65 70 75 80 85 90 Jul'09 Sep'09 Nov'09 Jan'10 Mar'10

Price/cwt (USD)

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agribusiness group

Sales were $41.8 million compared to $44.6 million last year Adjusted Operating Earnings increased to $6.5 million from $2.1 million last year Improved hog production performance

– Stronger hog market prices and lower feed costs were offset by the rise in the Canadian dollar and short-term hedging positions – $3 million related to government support to compensate hog producers for losses in prior years

Rendering earnings down slightly, mostly reflecting higher raw material costs

$59 $62 $64 $42 $49 $45 $56 $55 $51 $233 $206

Sales ($Millions) Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10

Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10

Operating Earnings ($Millions)

$48

$8 $2 $16 $15

• $3

$12 $13 $15 $7 $30

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bakery products group

Sales declined to $381.5 million from $412.5 million last year due to currency changes and lower volumes

– 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 U.S. and U.K. frozen bakery operations – Partly offset by improved results in fresh bakery

Signs of improvement in both these businesses

– Volume recovery underway in frozen bakery – Implementing cost reduction initiatives in the U.K. that will improve manufacturing efficiencies in current recessionary environment – Earnings expected to strengthen through remainder of year

$17 $9 $27 $28 $33 $31 $22 $20 $17 $102 $83

Sales ($Millions) Operating Earnings ($Millions) Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10

$413 $382 $382 $437 $442 $444 $435 $425 $432 $1,706 $1,705

Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10

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focus on growing EBITDA margins

Steady margin expansion as prepared meats business improves and benefits from protein transformation benefits are sustained Focused on continued margin growth through cost reduction, pricing and innovation

MLF Protein EBITDA margin MLF Bakery EBITDA margin

Margins typically stable and in- line with industry U.K. and Frozen impacting margins in the short-term; actions in place to restore

9

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

10

implementing strategic agenda

Continue to build food safety excellence Realize full potential of packaged meats business Increase efficiency and reduce costs Drive Organic Growth

Goal to deliver EBITDA margin target of 10-12%

1 2 3 4

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capital expenditures

Capital expenditures decreased to $28.7 million from $57.7 million last year Good progress continues on SAP implementation

– 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

New mega-scale bakery project underway

– Estimated cost of $100 million – Construction is expected to start mid- 2010; commissioning to commence mid- 2011; consolidation of three smaller bakeries completed by early 2013

$46 $63 $206 $58 $49 $49 $30 $36 $40 $163 $29 SAP-related Capital

Capital Expenditures ($Millions) Q1 Q2 Q3

Full Year

Q4

’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10 ’08 ’09 ‘10

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• ther 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 28th 2010, 65% of total debt was fixed and not exposed to interest rate fluctuations

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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

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

• perations and factors that could impact the Company’s financial results.