Maple Leaf Foods will merge its plant and meat protein divisions and plans to expand in the U.S. market, the company says.
“With our refreshed strategic blueprint announced today, we are sharpening our execution focus … aligning the talents of our team to leverage the strength of our portfolio of leading brands, leadership in sustainability and world-class assets,” said company president and chief executive officer Curtis Frank in a news release.
Maple Leaf Foods released its fourth quarter financial results on Feb. 22. Over 2023, its meat protein group’s sales increased about three percent to $4.74 billion.
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However, sales didn’t meet expectations in the year’s final quarter “as a result of global pork market dislocations that have persisted longer and deeper than we anticipated, and a challenging consumer demand environment,” Frank said.
“Plus we still have a short distance to go to bring home the full benefits from our London Poultry and Bacon Centre of Excellence projects,” he said, referring to two facilities in Ontario and Manitoba that have incurred significant investment by the company.
At the end of 2023, the meat protein group had an adjusted EBITDA (earnings before interest,taxes, depreciation and amortization) of $463 million, up 22.3 percent from 2022.
The plant protein group saw sales of $147 million, down just over 13 percent from the prior year.
“The sales decline was driven by lower volumes in retail and food service products, partially offset by pricing action implemented in prior quarters to mitigate inflation,” said the company’s 2023 annual report.
The plant division’s end-of-year EBITDA showed a loss of $32.9 million compared with $105.4 million in 2022. The company said this improvement came on reduction of start-up expenses, higher pricing and “operational improvements.”
In an emailed statement, a spokesperson for Maple Leaf said the plant-based business had performed well in the final quarter of the year. During that window, it posted a positive adjusted EBITDA of $100,000.
It was a tough year in general for North America’s meat processors. Eastern Canadian company Olymel reduced hog production in Alberta and Saskatchewan early in the year, and the closure of five Alberta sow units and one Saskatchewan unit was announced in May 2023. That was followed by announcements that the company would shutter processing plants in Ontario and Quebec.
“Over the past two years it is well documented that Olymel has experienced significant losses in the processing of fresh pork as a result of limited market access globally,” Olymel CEO Yanick Gervais said last May. “Now, coupled with stubbornly high feed costs, resulting in unprecedented losses in the hog sector, we have little choice but to retract and position ourselves for success in the future when conditions improve.”
The year also saw Manitoba-based Hylife Foods close its plant in Windom, Minnesota, at the beginning of June and lay off some workers in Manitoba, citing global conditions. Most of the lost positions in Manitoba were administrative, the company said.
In the plant protein space, Nourish Marketing noted in its 2024 trend report that, while consumer curiousity drove the first wave of plant-based meat analogues, most consumers “will not pay a price comparable to meat for a product they view as a disappointing alternative to the real thing.” Vegans and vegetarians drive only a small portion of sales, it said.
Nourish predicted a consolidation of products in that space and a turn toward more plant-forward options.
