Are dark clouds on Maple Leaf’s horizon?

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click image to zoomMaple Leaf Last week, Canadian food processor Maple Leaf Foods reported a disappointing quarterly loss, hurt by weak returns on raising pigs.

“Market conditions which affected first quarter results continued into the second quarter, although there was material improvement in important areas,” Michael H. McCain, President and CEO of Maple Leaf said in a news release. “Hog production returns, global pork markets and volatile raw material markets all contributed to a material year-over-year earnings decline. This was compounded by the costs of transition and start-ups in our new prepared meat manufacturing and distribution network.”

Read Maple Leaf’s financial report here.

After these results, several analysts have cast doubts on the company’s long-term plans after two consecutive weak quarters.

"They've got a lot more pigs there that are losing money," Robert Gibson, analyst at Octagon Capital, told Reuters.

BMO Capital Markets analyst Kenneth Zaslow also expressed his concern, according to Meatingplace.

"While we anticipated that [the company] would continue to face challenges in [the second quarter], the magnitude of issues has exceeded our and consensus expectations," Zaslow wrote in a note to investors. 

While the news is less than ideal for Maple Leaf Food, both Zaslow and McCain believe that market conditions will likely improve.  

Read more from Meatingplace.



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