07/31/2013 10:43 EDT | Updated 09/30/2013 05:12 EDT

Maple Leaf Foods Q2 profit flat on market conditions, costs related to new plant

TORONTO - Maple Leaf Foods Inc. (TSX:MFI) reported flat earnings for the second quarter, compared to $26 million last year, citing market conditions as well as costs from the start-up of its prepared meat manufacturing and distribution network.

Sales came in at $1.2 billion, down nearly four per cent from the same time last year. The decline was two per cent after adjusting for the impacts of divestitures and foreign exchange.

Hog production returns, global pork markets and volatile raw material markets all contributed to the earnings decline.

They also offset strong growth in prepared meats volumes from earlier in the year as well as improvement in the bakery segment, which the company expects will continue.

Chief executive Michael McCain said market conditions were expected to improve, however, and that Maple Leaf's commercial fundamentals were good.

The earnings amounted to a loss of two cents per share compared to a profit of 17 cents per share in the same quarter last year.

The earnings included $15.4 million of pre-tax expenses related to restructuring and other related costs.

"Market conditions which affected first-quarter results continued into the second quarter, although there was material improvement in important areas," McCain said in a statement.

"We are satisfied with our strategic progress, although we are now at the peak of change and expect earnings volatility through this transition."