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Supply chain issues, inflation dent Maple Leaf profit

Maple Leaf Foods reported its financial results for 2022’s first quarter, and while sales for both its meat and plant protein divisions were up, market conditions hurt the processor’s net earnings.

Sales were $1.13 billion, a 7% increase over last year's first quarter, while net earnings fell 71.3% to $13.7 million.

Earnings were affected by COVID-19 operational and supply chain disruptions, inflationary and feed cost increases and higher start-up expenses, partly offset by higher sales, the company said.

“As fully expected, intense Omicron impacts, including high levels of absenteeism, inflation, and supply chain disruptions, challenged us operationally, yet we achieved exceptional business performance in these extreme conditions,” Michael McCain, Maple Leaf’s president and CEO, said in comments accompanying the report.

Meat and plant protein businesses

Meat protein sales rose 7.5% to $1.09 billion, with a gross profit of $131 million and adjusted EBITDA margin of 9.0%.

Plant protein sales, meanwhile, were up 5.2%, excluding the impact of foreign exchange translations, to $44.9 million, with a gross loss of $6.3 million and adjusted EBITDA loss of 68.4%.

Maple Leaf anticipates “mid-to-high single digit sales growth” for its meat protein business for 2022, and expects its new London, Ontario, poultry facility to deliver about $100 million of additional adjusted EBITDA when it is fully operational by the end of 2023.

In the plant protein business, Maple Leaf is targeting a “neutral or better adjusted EBITDA in the latter half of 2023.”

The company, which previously said it plans to “reassess” its plant protein investments, indicated the reassessment was driven by a "pronounced slowdown in growth rates in the category, particularly in the second half of the year.”

Maple Leaf said that analysis is “ongoing,” but noted that “the very high category growth rates previously predicted by many industry experts are unlikely to be achieved given current customer feedback, experience, buy rates and household penetration.”

Maple Leaf’s current estimates are for a 10% to 15% annual growth rate for plant protein, which would make it a $6 billion to $10 billion market by 2030.

Voir les résultats détaillés ici : Les Aliments Maple Leaf communique ses résultats financiers du premier trimestre de 2022

Par : Peter Thomas Ricci (04/05/2022)

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