MISSISSAUGA, ONT. — Restructuring costs of C$46.2 million ($35.1 million) impacted net earnings negatively for Maple Leaf Foods, Inc. in the fiscal year ended Dec. 31, 2018, but investing in a poultry facility, which was part of the costs, and in plant-based protein should benefit the company in future fiscal years, company executives said.
Maple Leaf Foods posted net earnings of C$101.3 million ($76.9 million), or C$0.81 (62c) per share on the common stock, which were down 38% from C$164.1 million, or C$1.28 per share, in the previous year.
A one-time restructuring charge was connected to a poultry investment in London, Ont., said Michael H. McCain, president and chief executive officer, in a Feb. 28 earnings call.
“We announced the construction of a world-class, game-changing poultry facility, the culmination of years of careful planning,” he said. “That’s the investment that drove the $42 million restructuring charge in the (fourth) quarter, a one-time experience. This new facility will enable us to reduce costs by consolidating three subscale plants into one efficient scale facility and expand margins through increased value-added processing capacity and capabilities.”
A change in the fair value of biological assets, unrealized gains on derivative contracts and acquisition costs also contributed to restructuring costs in the fiscal year.
Maple Leaf Foods continued to experience double-digit growth in plant-based protein, said Deborah K. Simpson, chief financial officer. Maple Leaf Foods will launch the Lightlife Burger first to food service and then to retail in the United States, Mr. McCain said. The Canadian launch will follow later this spring.
“Seizing on the rising demand of alternative proteins that look and taste like meat, we’ve launched our Lightlife Burger,” he said. “It’s the hero in our new pea-based product line of alternative proteins that includes the burger, grounds, bratwurst sausage and Italian sausage. Our innovation and culinary team have developed a line that, shall I say, goes beyond and delivers better taste, better texture, aroma and importantly, better, simpler nutritional profiles. It’s a breakthrough that we think is the best plant burger in the largest and fastest-growing segment of the refrigerated market.”
Mississauga-based Maple Leaf Foods had sales of C$3,495.5 million ($2,654.8 million), which were down 0.8% from C$3,522.2 million in the previous fiscal year. Declines in fresh market prices more than offset sales growth in prepared meats, sustainable meats and plant protein.
In the fourth quarter, Maple Leaf Foods had net earnings of C$11.9 million, or C$0.10 per share on the common stock, which was down 80% from C$59.1 million, or C$0.47 per share, in the previous year’s fourth quarter. Sales of C$893.9 million were up 2% from C$876.8 million.
Maple Leaf Foods will increase its quarterly dividend by C$0.015 per share, or 11.5%, to C$0.145 per share, effective in the first quarter of 2019.
“Our plan is to change the course of protein production and consumption by leading new production systems and commitments in animal proteins to meet sustainable goals while simultaneously driving growth in all plant alternative proteins,” Mr. McCain said. “We are managing and delivering for the short term and relentlessly pursuing what matters for the long term.”