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Less fresh pork, more stock volatility

by 5m Editor
12 October 2007, at 10:33am

CANADA - A year ago today, Maple Leaf Foods Inc. unveiled a massive three-year restructuring plan to transform the company from a major fresh pork producer into a firm focused on packaged foods.

The transformation, prompted mainly by a rising Canadian dollar that killed margins on fresh pork exports, is a radical shift for a company that has traditionally leaned heavily on its bulk pork business.

One-third of the way through the process, the company has made significant progress, having closed a number of plants and pumped up the manufacturing and marketing of its high-margin prepared food products, such as its new Simply Fresh line of meals.

The company, which likes slogans, says it will no longer be a provider of "fresh pork for the world" but will evolve into a "value-added meat, meals and bakery company."

Until a few weeks ago, Maple Leaf stock seemed to be tracking the progress made in that transformation. Its shares were trading above $16, over the $13 they were sitting at when the restructuring program was announced last October.

But in the last few weeks the stock has plunged almost 20 per cent to well below $14, a move that has puzzled analysts, shareholders, and the company itself.

Source: GlobeAndMail

5m Editor