MISSiSSAUGA, ONT. — Sales and net earnings increased for Maple Leaf Foods Inc. during the third quarter ended Sept. 30, driven by strong performances in the company’s Meat and Plant Protein groups.
Net earnings for the quarter were C$66 million, equal to C54¢ per share on the common stock, up from C$13.4 million, or C11¢ per share, in the year-ago quarter.
Sales for the third quarter of 2020 were C$1.01 billion, up 6.2%, compared with C$996 million last year.
“Our operational resiliency, strong brands, and the success of our sustainable meat strategy delivered excellent results in Meat Protein in the third quarter,” said Michael H. McCain, president and chief executive officer. “While supply chain disruptions impacted short-term Plant Protein performance, we are seeing strong underlying consumer demand, we have implemented inspiring new brand strategies, and we are incredibly excited about the long-term prospects of this business. We have built significant growth engines at Maple Leaf Foods.”
On a segment basis, the Meat Protein Group posted sales for the third quarter of 2020 of C$1 billion, an increase of 6.4% compared with C$953.3 million last year, driven by higher demand in the retail channel in North America, the company said. This more than offset lower volumes in foodservice as a result of pandemic-related impacts. Sales in the segment also benefited from favorable mix driven by growth in sustainable meats and branded products, growth in exports to Asian markets and positive impact of foreign currency translation, the company said.
The Meat Protein Group had an adjusted EBITDA margin at 12.1%, which represents a fourth consecutive quarter above 11% despite COVID-19 impacts, including the operational impact on the company’s Brandon, Man., facility due to a community outbreak. Gross costs associated with COVID-19 were approximately C$19 million.
“These were partially offset by discretionary spending cuts in selling, general and administrative expenses (SG&A), resulting in a net impact of approximately C$12 million to total company adjusted EBITDA,” the company said.
Maple Leaf Foods’ Meat Protein Group is comprised of prepared meats, ready-to-cook and ready-to-serve meals, value-added fresh pork and poultry products that are sold to retail, foodservice and industrial channels, and agricultural operations in pork and poultry. Maple Leaf, Maple Leaf Prime, Schneiders, Mina, Greenfield Natural Meat Co., Swift and many of the company’s regional brands fall under the Meat Protein Group.
In the Plant Protein Group, sales grew 9.3% (8.2% after excluding the impacts of foreign exchange) to C$51.4 million, which compared with C$47 million last year. Maple Leaf attributed growth to expanded distribution of new products and continued volume increases in its existing portfolio in addition to investments in new products in rapidly expanding categories. Adjusted EBITDA in the segment was a loss of C$39.6 million.
“Production issues as well as the impact of COVID-19 tempered sales growth in the quarter,” the company said.
The Plant Protein Group is comprised of refrigerated plant protein products, premium grain-based protein, and vegan cheese products sold to retail, foodservice and industrial channels. The group includes the company’s Lightlife and Field Roast Grain Meat Co. brands.
Year-to-date sales for 2020 advanced 8.5% to C$3.17 billion, which compared with C$2.92 billion in 2019.
“Sales growth reflects ongoing progress in key strategic areas such as sustainable meats for the Meat Protein Group with increases of 8.1%, while the Plant Protein Group delivered growth of 25%,” the company said.
Year-to-date net earnings for 2020 totaled C$87.9 million, or C72¢ per share, which compared with C$57.2 million, or C46¢ per share, in 2019. Maple Leaf attributed the result to strong commercial performance in the Meat Protein Group, which more than offset costs to mitigate COVID-19 risks, strategic investment in the Plant Protein Group, as well as a favorable resolution of an income tax audit in 2019.