Maple Leaf Foods Inc. reports Q3 profit down from year ago, sales up

MISSISSAUGA, Ont. — Maple Leaf Foods Inc. third-quarter results fell far short of analyst expectations due to “abnormal erratic” pork market conditions and increased investment into plant-based protein.

“The headline of our third quarter marked this pivot point of investment in our plant protein business, combined with what are the extraordinary events in pork markets that affected our meat business,” said CEO Michael H. McCain during a conference call with analysts Wednesday.

Strong performance in prepared meats, value-added pork and poultry and plant protein, and a favourable resolution of an income tax audit was more than offset by the investments and pork markets, the company said.

Maple Leaf earned $13.4 million or 11 cents per share for the quarter ended Sept. 30 compared with a profit of $26.6 million or 21 cents per share a year ago.

On an adjusted basis, Maple Leaf earned three cents per share in the quarter, down from an adjusted profit of 29 cents per share. Analysts on average had expected a profit of 31 cents per share for the quarter, according to financial markets data firm Refinitiv.

Sales totalled $995.8 million, up from $874.8 million in the same quarter last year.

For the first time, the company reported financial results from its meat- and plant-protein divisions separately, shedding some light on how the two arms of the company are faring.

Plant-based sales grew 30.1 per cent to nearly $47 million in the quarter as the company invested heavily to fuel growth in the plant-based protein business.

McCain said the spending commitment for the segment marks the first time since he joined the company that it was intentionally running a cash flow loss to “capitalize on the enormous opportunity for rapid top line growth and realizing ultimate shareholder value.”

The company committed nearly $45 million in selling, general and administrative expenses for the plant-based segment in the quarter — compared to roughly $9 million in the same three months the previous year.

Maple Leaf is investing in its brands to expand market penetration, create new products and more, said McCain.

About 70 per cent of that investment, historically, has been on marketing and promotions. The company recently partnered with talk show host Ellen DeGeneres, for example, to promote its vegan patty, the Lightlife burger.

Competitor Beyond Meat, which makes a plant-based patty served in many Canadian national fast-food chains, reported third-quarter revenue growth of 250 per cent Tuesday.

The investments Maple Leaf is making is to drive sustained growth rates of more than 30 per cent in this business, McCain said.

“This kind of growth rate just is not available to us in a traditional food segment.”

Maple Leaf’s meat protein group sales totalled about $953 million for the quarter, up from roughly $839 million in the same quarter the previous year.

The company paid about $79 million in selling, general and administrative expenses for this protein group, which recorded a “disappointing” nine per cent EBITA margin — down 90 basis points from this time last year, McCain said.

Results from the meat business reflected Maple Leaf falling on the wrong side of abnormal, erratic market conditions, said McCain, citing the dual influences of African swine fever in Asia and global trade.

The company expects “a rebound effect” in the fourth quarter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Whistle Stop Cafe owner Christopher Scott and his sister Melodie are serving sit-down customers in their Mirror diner to protest health restrictions that they say are unfair to restaurants and other small businesses. Photo by PAUL COWLEY/Advocate staff
Central Alberta restaurant owner defies health restrictions by serving diners

Whistle Stop Cafe owner says pandemic restrictions unfair to restaurants and small businesses

Alberta’s chief medical officer of health Dr. Deena Hinshaw said in her daily update on Monday that 362 new COVID cases have been identified and 7,200 tests done in the last 24 hours. (File photo)
COVID-19: UK variant may have entered broader community says Alberta health minister

25 cases of two variants identified in Alberta and one not linked to travel

An ice sculpture of a bee with a timely message was created near the Ross Street Patio. It’s party of a Downtown Business Association initiative to draw more people downtown to support local businesses. (Photo by LANA MICHELIN/Advocate staff).
Ice sculptures created to draw more people to downtown Red Deer

Three sculptures can be seem at various venues

Lab and x-ray technologist Rebecca Walter demonstrates a new digital radiographic X-ray unit funded by an $850,000 donation. The new unit is at the Sylvan Lake Advanced Ambulatory Care Service.
Photo contributed
New Sylvan Lake X-ray unit up and running

Radiographic x-ray unit made possible by $850,000 donation from Sylvan Lake couple

(Black Press file photo)
Police seeking suspects in Bowden armed robbery

Man was beaten and robbed of his wallet

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

Toronto Maple Leafs alumni George Armstrong, right, and son of Maple Leafs alumni Syl Apps, Syl Apps Jr., shake hands during a pre-game ceremony before the Toronto Maple Leafs and Winnipeg Jets NHL game in Toronto on February 21, 2015. George Armstrong, who captained the Toronto Maple Leafs to four Stanley Cups in the '60s and wore the blue and white his entire career, has died. He was 90. The Maple Leafs confirmed the death Sunday on Twitter. THE CANADIAN PRESS/Darren Calabrese
Former Maple Leafs captain George Armstrong dies

Former Maple Leafs captain George Armstrong dies

Green Bay Packers' Adrian Amos pauses after losing the NFC championship NFL football game to the Tampa Bay Buccaneers in Green Bay, Wis., Sunday, Jan. 24, 2021. The Buccaneers defeated the Packers 31-26 to advance to the Super Bowl. (AP Photo/Morry Gash)
Aaron Rodgers’ ‘uncertain’ future hangs over Green Bay

Aaron Rodgers’ ‘uncertain’ future hangs over Green Bay

Toronto Argonauts head coach Scott Milanovich calls the plays on the sideline against Winnipeg Blue Bombers during the first half of CFL action in Winnipeg on August 14, 2015. THE CANADIAN PRESS/John Woods
Scott Milanovich steps down as Edmonton’s head coach to pursue opportunities in NFL

Scott Milanovich steps down as Edmonton’s head coach to pursue opportunities in NFL

Toronto Raptors guard Fred VanVleet (23) goes under Indiana Pacers guards Malcolm Brogdon (7) and Jeremy Lamb (26) to shoot during the second half of an NBA basketball game in Indianapolis, Monday, Jan. 25, 2021. THE CANADIAN PRESS/AP-Michael Conroy
Brogdon scores 36 points to lead Pacers over Toronto Raptors

Brogdon scores 36 points to lead Pacers over Toronto Raptors

FILE - In this Feb. 14, 2020, file photo, baseballs occupy a bucket after use during fielding practice during spring training baseball workouts for pitchers and catchers at Cleveland Indians camp in Avondale, Ariz. Major League Baseball is suspending all political contributions in the wake of last week's invasion of the U.S. Capitol by a mob loyal to President Donald Trump, joining a wave of major corporations rethinking their efforts to lobby Washington. “In light of the unprecedented events last week at the U.S. Capitol, MLB is suspending contributions from its Political Action Committee pending a review of our political contribution policy going forward,” the league said in a statement to The Associated Press on Wednesday, Jan. 13, 2021. (AP Photo/Ross D. Franklin, File)
Cactus League asks MLB to delay spring training due to COVID

Cactus League asks MLB to delay spring training due to COVID

Patrick Cantlay, right, bumps fists with Andrew Putman before teeing off on the first hole during the final round of The American Express golf tournament on the Pete Dye Stadium Course at PGA West Sunday, Jan. 24, 2021, in La Quinta, Calif. (AP Photo/Marcio Jose Sanchez)
Si Woo Kim holds off Cantlay to win The American Express

Si Woo Kim holds off Cantlay to win The American Express

Danielle Kang winds up to hit her tee shot on the fifth hole during the final round of the Tournament of Champions LPGA golf tournament, Sunday, Jan. 24, 2021, in Lake Buena Vista, Fla. (AP Photo/Phelan M. Ebenhack)
Jessica Korda rallies to beat Kang in playoff at LPGA opener, Henderson ninth

Jessica Korda rallies to beat Kang in playoff at LPGA opener, Henderson ninth

COVID-19 scare prompts cancellation of Canada-U. S. soccer scrimmage in Florida

COVID-19 scare prompts cancellation of Canada-U. S. soccer scrimmage in Florida

Most Read