MISSISSAUGA, Ontario – Volatility in hog markets and China’s decision to suspend imports of Canadian pork more than offset strong performances in other business segments of Maple Leaf Foods Inc. during the third quarter.
Sales for the third quarter ended Sept. 30, 2019, were C$995.8 million ($755.6 million) compared with C$874.8 million reported in the third quarter of 2018.
Net earnings for the quarter were C$13.4 million (C101.6 million), or C$0.11 basic earnings per share, compared with net earnings of C$26.6 million, or C$0.21 basic earnings per share reported in the year-ago quarter.
Adjusted operating earnings for the third quarter were C$9.7 million compared to C$51.0 million last year. Adjusted earnings per share for the third quarter was C$0.03 compared to C$0.29 last year.
“Strong performance in prepared meats, value-added pork and poultry and plant protein, and a tax recovery from the favorable resolution of an income tax audit was more than offset by adverse pork market conditions, including heightened volatility in hog prices and the Chinese import suspension of Canadian pork, and strategic investments in plant protein to drive top line growth and market leadership,” the company explained.
Michael H. McCain, president and CEO of Maple Leaf said the most recent quarter is the company’s first with two different operating segments: meat protein and plant protein.
“Our plant protein business saw 30 percent growth and accelerating, and we are intentionally investing very heavily in that growth,” McCain said. “Meat protein faced an unexpectedly erratic market condition in the quarter connected with global trade, and we expect that to reverse in short order. We are very excited about how we are positioned and where we are headed.”
The Meat Protein Group is comprised of prepared meats, ready-to-cook and ready-to-serve meals, hog production and value-added fresh pork and poultry products that are sold to retail, foodservice and industrial channels. Brands include Maple Leaf, Maple Leaf Prime, Schneiders, Mina, Greenfield Natural Meat Co. and Swift among others.
The Meat Protein Group reported sales for the third quarter of C$953.3 million compared to C$838.7 million last year. Excluding acquisitions, the sales grew 4.8 percent “…driven by favorable mix tied to food renovation supporting major brand strategies and pricing actions implemented during the quarter and in late 2018 to mitigate higher raw material input costs,” the company said. “Continued expansion of sustainable meats, including double-digit growth in the US, also contributed to strong sales.”
On an adjusted basis, operating earnings in the business during the third quarter were C$44.6 million compared to C$50.6 million last year.
In the Plant Protein Group — which comprises refrigerated plant protein products, premium grain-based protein and vegan cheese products under the Lightlife and Field Roast Grain Meat Co. brands — sales increased in the third quarter by 30.1 percent to C$47.0 million compared to C$36.1 million in the third quarter of 2018. Expanded distribution of new products and continued volume increases in the segment’s existing portfolio drove sales growth, the company said.
On an adjusted basis, Maple Leaf reported an operating loss of C$34.9 million compared to earnings of C$0.4 million last year. The decline, “…reflects a deliberate focus on accelerating sales growth through increased investments in advertising, promotion and marketing, organizational capacity, product development and operational efficiency,” the company said.
For the nine months ended Sept. 30, 2019, sales increased to C$2,925.6 million compared to C$2,601.6 million last year. Net earnings for the nine months were C$57.2 million compared to C$89.4 million last year.
Year-to-date adjusted operating earnings were C$117.0 million compared to C$161.6 million last year, and adjusted earnings per share were C$0.55 compared to C$0.93 last year.
(1 Canadian dollar = 0.76 United States dollar)