Food processing firm Premium Brands says it was able to post a record quarter in spite of the blow to consumer confidence from Maple Leaf Foods’ major meat recall this summer.
The Richmond, B.C. income fund, formerly known as Fletcher’s Fine Foods, with specialty food and distribution businesses across Western Canada, reported earnings of $7.33 million on $123.44 million in revenue in its third quarter ending Sept. 27, up from $7.25 million on $108.63 million in revenues in the year-earlier period.
“During the quarter we sustained what we consider to be ‘the perfect storm,'” CEO George Paleologou said in a release Wednesday.
“A combination of an unprecedented product recall by one of Canada’s largest meat processors… and record-high gas prices, which resulted in a general decline in consumer discretionary spending, created significant challenges in maintaining our historic top-line growth rate.”
Specifically, the major product recall from Maple Leaf, after cases of listeriosis were tied to product from one of that company’s Toronto meat processing plants, led to “a general decline in consumer spending across a range of product categories including pre-packaged sandwiches and sliced deli meats,” the company said.
Premium Brands estimated the impact of the Maple Leaf recall on its own Q3 revenues to be about $800,000, on top of a recall of product from one of Premium Brands’ own pre-packaged sandwich plants, which it said cost a further $300,000 in lost sales in Q3. The income fund said its product recall insurance policy would cover much of the latter loss.
“Meanwhile, a rapid acceleration of several key protein commodity inputs to record-high levels pressured our near-term margins, further impacting our ability to meet our profitability targets,” Paleologou said.
The company also pointed to “a general economic slowdown in certain areas of Western Canada that were negatively impacted by reduced visits from U.S. tourists, which in turn was likely the result of the appreciation of the Canadian dollar relative to the U.S. dollar and historically high gas prices.”
Premium Brands, in its Q3, also wrapped up its purchase of B and C Food Distributors, which distributes meat products to restaurants, hotels, institutions and retail grocers on Vancouver Island.
Premium Brands’ other food and distribution operations include Grimm’s, Harvest, McSweeney’s, Bread Garden, Hygaard, Hempler’s, Quality Fresh Foods, Gloria’s Fresh, Harlan’s and Centennial Foodservice.