MISSISSAUGA, Ontario – Higher prices for its products along with lower input costs propelled Maple Leaf Foods Inc. to first-quarter net earnings of C$50.1 million ($37.2 million), or C$.41 basic earnings per share, up 79.5 percent from the year-ago quarter.
The company said changes in fair value of biological assets and unrealized gains on derivative contracts helped net earnings.
Sales for the first quarter ended March 31, 2019 were C$907.1 million ($673.7 million) compared with C$817.5 million ($607.2 million) reported in the first quarter of 2018. The company attributed the result to sales growth in the core business of 1.4 percent — which was driven primarily by higher prices for Maple Leaf Foods products — along with a favorable mix due to food renovation. Additionally, continued expansion of sustainable meats and plant-based protein also contributed to sales growth.
“Our first quarter of 2019 is headlined by higher sales growth, fueled by recent acquisitions, combined with some in-quarter margin compression as we invested in that growth,” said Michael H. McCain, president and CEO. “While market conditions continued to be adverse, they are expected to improve for the balance of the year. We are progressing on track on all strategic platforms to deliver structural margin expansion and pursue our vision to be the most sustainable protein company on earth.”
Excluding items, adjusted operating earnings were C$42.1 million, or C$.20 adjusted earnings per share, compared with C$52.8 million, or C$.29 adjusted earnings per share in the year-ago quarter.
“Solid commercial performance was driven primarily by pricing actions taken in the prior quarter, improved sales mix from the company’s food renovation initiatives, lower input costs for prepared meats, and growth in value-added fresh pork and poultry,” Maple Leaf explained. “These improvements were more than offset by adverse fresh market conditions and the impact of growth initiatives. Growth initiatives in the quarter included investments in plant-based protein to support the brands, start-up costs related to capacity expansion in protein kits and meat pies and the short-term dilutive impact of 2018 acquisitions.”
Maple Leaf announced on April 30 a new syndicated credit facility of nearly C$2 billion which will be put toward the construction of the company’s manufacturing facilities in London, Ontario and Shelbyville, Indiana.
The company intends to invest $310 million in the new plant-based processing facility in Shelbyville. The project will be supported by approximately $50.0 million in US government and utility grants and incentives, including $9.6 million toward capital and one-time start-up costs, and approximately $40 million in 10-year operational support, according to Maple Leaf. The project is expected to double the company’s current production of plant-based products.
1 Canadian dollar = 0.74 US dollar