Maple Leaf Foods: Q4 swings to profit; focus swings to growth

by Erica Shaffer
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MISSASSAUGA, Ontario – Maple Leaf Foods’ strong fourth quarter performance was a fitting manner in which to end one successful year after fighting through seven difficult years of restructuring. But the journey isn’t done. Speaking to analysts during a March 1 earnings conference call, Michael McCain, president and CEO, said the centerpiece of the company’s journey “…is truly now about growth, brands, innovation and continued margin growth.”

 

Michael McCain, CEO of Maple Leaf Foods Inc.
Michael McCain, Maple Leaf Foods, president and CEO

“We are investing much of these savings to fuel product innovation and marketing as we increase our focus on growth,” McCain said. “We are continuing to build a cost culture throughout the Maple Leaf organization, reducing the cost of running our business so we can further invest in growing our business.”

Key points of focus will be growing the company’s position as a “sustainable” meat protein producer, product innovation and marketing. Maple Leaf already has increased ad and promotion spending in the marketplace by slightly more than 40 percent.

“We will have the strongest portfolio of new product innovation in our entire history rolling out, commencing in early second quarter,” McCain said. “And we’re relaunching one of our largest national brands, Schneiders, with an integrated multimedia campaign and an updated look to an iconic Canadian brand.”

McCain described the company’s role as a sustainable meat protein producer as “…a very powerful growth platform.” He noted that Maple Leaf Foods has more market penetration of natural meat products than any other major branded meat products in North America. So, adopting sustainable protein production as a core growth platform has yielded early results for the company, he said.

“We’re actively working to reduce or eliminate antibiotic usage within our supply chain through progressive farming practices,” he added. “We’re currently a leading processor of pork raised without antibiotics in all of North America and the leader in the Canadian poultry market.”

Animal welfare is one of the pillars of Maple Leaf Foods’ commitment to sustainability. The conversion of the company’s sow barns from gestation crates to group housing is a top priority for Maple Leaf Foods. Debbie Simpson, CFO, said the company expects to spend approximately C$25 million in support of the company’s sustainability commitments.

 

Debbie Simpson, Maple Leaf Foods
Debbie Simpson, Maple Leaf Foods CFO

“A significant portion of this capital spend is supporting the ongoing conversion of our sow barns from gestation crates to loose housing,” she said. “We also expect to invest in our Edmonton poultry facility to advance our commitment to animal care.”

Other projects in the pipeline for Maple Leaf Foods include capital expenditures of C$65 million on “incremental profit enhancement initiatives.” The majority of the money will be spent on enhancements at Maple Leaf’s new bacon plant in Winnipeg, Manitoba, and optimizing packaging capabilities at the company’s Brampton pork processing facility.

“Now that the hard work of supply chain transformation is over and successful, we’re clearly turning our attention to growth led by our powerful brands, our number-one market positions, and our enormous product innovation capacity,” McCain said. “It’s a very exciting transition for us.”

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