Canada’s Maple Leaf Foods is to merge its meat and plant-based protein businesses after breaking even in its meat-free division.
The meat group revealed the reorganisation alongside its full-year results for 2023, when, in the fourth quarter, it achieved its goal from 2022 “to deliver neutral, or better, adjusted EBITDA within the next 18 months” in its plant protein division.
Sales from the division, however, fell in the fourth quarter and for the year as a whole. Plant protein sales were C$36.5m ($27m) for the fourth quarter, a decrease of 9.1% compared to the same quarter of a year ago. Across 2023, sales slid 13.2% to C$147m.
However, CFO David Smales told analysts during an earnings call: “Plant adjusted EBITDA was C$95,000, achieving the adjusted EBITDA neutral target set for this business, and compares to an adjusted EBITDA loss in the fourth quarter of last year of C$20.4m.”
For the full twelve months, however, the plant-protein division still made an adjusted EBITDA loss of C$33m, albeit down from C$105m in 2022.
Regarding the revamp, CEO Curtis Frank said the company is taking steps to “simplify the business” and focusing on “growing our Canadian business while leveraging a combined platform to accelerate growth in the US”.
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He told analysts yesterday (22 February): “Bringing together meat and plant as a platform to grow inside the United States is going to be very lucrative for us over a long period of time. Those benefits might not show up next week, but they’re going to show up over time.
“Just consolidating the breadth of customer relationships, we have, the distribution, putting products on one truck, the way we show up with retailers is going to be a very powerful move for us, and it’s one that we’re quite excited about.”
The chief executive added that there are “synergies” involved in merging the two divisions into one, through “customer relationships, the distribution network, the supply chain, marketing, bringing our marketing efforts together”.
Maple Leaf’s meat market fell below its expectations, especially in the final three months of 2023.
Meat protein sales grew to C$1.16bn, an increase of 0.8% year over year. Adjusted EBITDA was C$122m, up 60.3% on the prior year.
Frank said the group was “incredibly frustrated with the performance overall” of its meat business in the fourth quarter.
“In the fourth quarter, our meat protein results fell below our expectations, as a result of global pork market dislocations that have persisted longer and deeper than we anticipated, and a challenging consumer demand environment, plus we still have a short distance to go to bring home the full benefits from our London Poultry and Bacon centre of excellence projects,” Frank added.
Meat protein group sales grew to C$4.74bn, up 3.1%. Adjusted EBITDA was $463m.
For the full twelve months, total company sales grew by 2.7% to C$4.87bn, with an adjusted EBITDA margin of 8.8%.
The year marked a net loss of C$125m compared to a net loss of $311.9m last year.
