VANCOUVER - Shares in specialty foods producer Premium Brands Holdings Corp. dropped by as much as 10 per cent Monday after it reported earnings fell in the third quarter due to indirect fallout from the African swine fever outbreak in China.
The company says prices for specialty pork products it imports from Europe spiked because China is importing much more pork, while prices for meat products in the U.S. and Canada didn't rise because China had placed restrictions on imports from the two countries.
Premium Brands says the "unprecedented dichotomy" reduced its margins, resulting in earnings of $26.9 million or 72 cents per share for the 13 weeks ending Sept. 28, down from $36.1 million or $1.09 per share a year earlier.
Its shares fell as low as $78.00 on the Toronto Stock Exchange, down from Friday's close of $86.91, before recovering to $80.80 by 2 p.m. ET.
Earlier this month, the Chinese government removed the ban on Canadian pork that had been in place since June.
In September, the Canadian Meat Council said the financial cost of the suspension to Canadian industry was close to $100 million.
The drop in Premium Brands earnings came even as the company hit record revenue of $968.3 million in the quarter, up from $835.5 million last year, as it continued its expansion into the United States.
On an adjusted basis, earnings were 88 cents per share, compared with $1.04 per share last year. Analysts had expected earnings of $1.16, and revenue of $953.6 million, according to financial markets data firm Refinitiv.
Premium Brands runs numerous food brands focused on protein products including Piller's deli meats, Harvest Meats and Oberto speciality meats.