Canada’s Maple Leaf Foods has posted a quarterly loss even as sales increased with the company pointing to “market headwinds” for pork.
The company reported a net loss of C$57.7m ($42.7m) for the opening three months of 2023, compared to a year-earlier profit of C$13.7m.
Adjusted EBITDA notched up a loss of C$12m, narrowing from a C$30.7m loss a year earlier. The margin was also in the red at 32.1% but an improvement from a negative 68.4%.
Adjusted operating profit rose 19.8% to C$19.3m. Earnings per share were also in the red at 48 Canadian cents, versus a positive 11 cents a year earlier.
Group sales in the quarter increased 4.3% to C$1.17bn, with Maple Leaf pointing to the challenges in pork within its meat business for the net loss, along with input-cost inflation.
First-quarter sales for the plant-protein category were down 16.7% at C$37.4m, “driven by lower volumes in retail and foodservice products, partially offset by pricing action implemented in prior quarters to mitigate inflation”.
Meat sales, including prepared meats, ready-to-cook and ready-to-serve meals, value-added fresh pork and poultry products, climbed 5% to C$1.14bn. Adjusted EBITDA fell 10.5% to C$87.3m, while the margin shrank to 7.6% from 9%.
Alongside the results, Maple Leaf rubber-stamped the appointment of Curtis Frank to lead the meat and plant-based protein supplier as president and CEO.
Frank has been with the business for more than two decades, recently serving as Maple Leaf’s head of operations.
Michael McCain, whose family is Maple Leaf’s largest shareholder having acquired the business in 1995 from Hillsdown Holdings in the UK, had announced his intention to step down from those roles last May. He will remain executive chair of the company’s board.
McCain said in the results commentary: “Although global pork markets continued in their dislocation during our first quarter, as expected, we made excellent progress in important dimensions of this inflection point year. Our supply chain has made exceptional progress back to full normalisation, we have advanced our much-needed inflation pricing, we began taking advantage of our renewed access to the Chinese markets and continue to see strong performance across our brands.”
For the full year, Maple Leaf is targeting group sales growth of mid-to-high single digits and an adjusted EBITDA margin of 14-16%.
McCain launched a review in 2021 of Maple Leaf’s alternative-meat business – conducted through the Greenleaf Foods subsidiary – following below-target sales amid what the company recognised was a re-assumption of growth prospects across the category.
McCain took Maple Leaf into the meat-free space in 2017 with the acquisition of the Field Roast Grain Co and Lightlife Foods. The latest financial results to 31 March show the process to achieve “neutral” adjusted EBITDA this year is still ongoing.
He added: “We have line of sight on being adjusted EBITDA neutral in our plant-protein business this year. At this point, we have full conviction that once pork markets normalise we will meet or exceed our financial targets of 14-16% adjusted EBITDA margins.”
